European shares rise after lower-than-expected inflation boosts case for smaller rate hikes

European shares closed higher on Wednesday and registered its second straight month of gains on hopes of easing Covid curbs in China and after cooler euro zone inflation data bolstered case for smaller rate hikes by the European Central Bank.

China-exposed luxury stocks were among the biggest boosts to European shares, followed by automotive sector and commodity stocks.

DUBLIN

The Iseq edged up 0.1 per cent, with the Dublin market buoyed by gains for financial stocks and Paddy Power owner Flutter Entertainment. Bank of Ireland rose 4.5 per cent to €7.81 and AIB added 0.7 per cent to €3.09, while Flutter finished 1.5 per cent higher at €140.75 after analysts at JP Morgan raised their price target for the stock.

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Elsewhere, it was a weak day for Smurfit Kappa, with the packaging group declining 1.4 per cent to €34.23. Insulation-maker Kingspan also fell, ending 1.1 per cent lower at €53.44.

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Ryanair slipped 0.8 per cent to 12.82 on a day when chief executive Michael O’Leary warned of security staff shortages at Dublin Airport this Christmas, while the airline also announced it was seeking 150 technology staff to aid its digital transformation.

LONDON

The FTSE 100 index added 0.8 per cent to seal its best monthly performance in two years, lifted by commodity-linked and consumer stocks on hopes of Chinese demand recovery and easing domestic political concerns. The mid-cap FTSE 250 index closed down 0.1 per cent.

Mining companies like Glencore, Rio Tinto and Anglo American led the gains on the commodity-heavy FTSE 100 helped by stock analysts’ optimism about the sector.

Pennon Group lost 2.4 per cent after the utilities company reported a lower half-year pretax profit, while shares of Rolls-Royce rose 2 per cent after analysts at Barclays initiated coverage of the engineering company with an “overweight” rating.

The FTSE 100 has climbed 12.9 per cent since its October 13th lows, when a bungled mini-budget sent markets into a tailspin, as new government leadership tries to restore investor confidence in the economy amid surging inflation and a severe cost-of-living crisis.

EUROPE

The pan-European STOXX 600 index rose 0.6 per cent to end November with a 6.8 per cent gain, its best monthly performance since July, as investors responded to an announcement of less stringent Covid curbs in the Chinese cities of Guangzhou and Chongqing.

Meanwhile, data showed consumer prices in the euro zone grew 10 per cent in November, below expectations of 10.4 per cent inflation and after a 10.6 per cent increase in October. The report came amid mixed signals from policymakers recently about the pace and path of future increase in borrowing costs.

Argenx jumped 7.1 per cent after the Dutch biopharmaceutical company announced a deal to acquire a US FDA Priority Review Voucher for $102 million (€98 million).

United Internet added 5.4 per cent after analysts at UBS upgraded the German telecommunications provider’s stock to “buy”. Telecom Italia shed 5.2 per cent after Italian cabinet undersecretary Alessio Butti said that the state had no plans to launch a full takeover bid for the former phone monopoly.

NEW YORK

Wall Street was mixed in early trading, with the Dow and S&P 500 down and heavyweight growth stocks boosting the Nasdaq as focus shifted to comments expected from Federal Reserve chairman Jerome Powell later in the day.

Heavyweight growth firms Apple, Microsoft and Alphabet rose between 0.1 per cent and 1 per cent.

Tesla’s shares rose 0.3 per cent, after China Merchants Bank International said the electric vehicle maker’s sales in China in November were boosted by price cuts and incentives offered on its Model 3 and Model Y.

Industrial conglomerate 3M fell 3.1 per cent amid weakness in its consumer-facing businesses.

Biogen jumped 4.2 per cent after its experimental Alzheimer’s drug slowed cognitive decline in a closely watched trial.