Sunday 24 February 2019

Markets Report: European shares gain on trade talks

 

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

EUROPEAN shares rose yesterday, driven by the export-oriented autos and tech sectors as optimism grew that the United States and China could avoid a full-blown trade war that would further decelerate a slowing global economy.

The pan-European Stoxx 600 benchmark broke a fresh three-week high, rising 0.4pc close to the end of the session, while the UK's Ftse-100 hit its highest level in five weeks.

"My scenario is that of an economic slowdown, but I expect things to get gradually better following a brutal 2018 dominated by tariffs and very harsh commercial rhetoric," said Roberto Lottici, a fund manager at Italy's Banca Ifigest.

Chinese and US teams ended trade talks in Beijing yesterday, and officials said details will be released soon.

A US trade delegation member said "it's been a good one for us".

European equities recorded their worst year in a decade in 2018, but so far this year they are up more than 3pc. A trade deal could turn investors more upbeat over company earnings as the fourth-quarter earnings season gets under way.

Overall, fourth-quarter earnings for Europe are expected to have risen 7.1pc on revenues up 4.5pc, according to Refinitiv data.

In Ireland, the Iseq Overall Index climbed alongside benchmarks at other European bourses.

Near the end of trading, it had risen 0.5pc to 5,711.

Shares in homebuilder Abbey plunged more than 7pc to €13. That was despite UK peer Taylor Wimpey saying that indicators for 2019 sales were solid, sending its shares more than 6pc higher. Abbey generates most of its revenue and sales in the UK.

Shares in CRH, Ireland's biggest company, had advanced 1.6pc to €24.31, while Bank of Ireland rose 1.5pc to €4.94 before the close. The UK's Ftse-100 was 0.6pc higher as the end of the session neared, while Germany's Dax was also up 0.6pc. France's CAC-40 was ahead 0.7pc.

Analyst Chris Bailey at Raymond James said the "glass half-full interpretation" of trading updates from domestically-focused UK businesses "indicates that investors are becoming a little less worried about problematic Brexit outcomes".

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