EUROPEAN stocks closed higher on Monday, with British blue-chips nearing record levels as investors took comfort from easing tensions in the Middle East and looked ahead to earnings from European banks and US tech giants later this week.
The continent-wide Stoxx 600 index rose 0.6 per cent, rebounding from last week’s selloff triggered by geopolitical concerns as well as worries that the Federal Reserve will delay interest rate cuts.
The main European regional markets barring Italy rose on Monday, with Britain’s commodity-heavy FTSE 100 jumping 1.6 per cent to near record highs, aided by a weaker pound and rising metal prices.
Traders also unwound their defensive positioning after Iran said that it had no plan to retaliate following an apparent Israeli drone attack within its borders.
“It’s a bit of a messy picture for markets at the moment with huge uncertainty around events in the Middle East, US tech seeing its biggest sell-off for around 18 months, and with yields climbing as rate cuts gets increasingly pushed out,” said Deutsche Bank strategist Jim Reid.
Earnings reports from European lenders will be in the spotlight this week as investors are likely to get a clearer picture of whether higher interest rates are still boosting profits or if a year-long share price rally will run out of steam.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Overall, quarterly earnings for Stoxx 600 companies are expected to decline 12.1 per cent from a year-ago period, according to LSEG data.
Bigger focus will be on earnings from some of Wall Street’s biggest names including Alphabet, Microsoft and Meta Platforms as well as economic data from across the globe later this week.
French central bank chief Francois Villeroy de Galhau said on Sunday tension in the Middle East is unlikely to drive up energy prices and should not affect the European Central Bank’s plans to start cutting interest rates in June.
Greece’s ATHEX index gained 2.0 per cent after credit ratings agency S&P revised the country’s outlook to “positive” from “stable”.
Among single stocks, Portuguese oil firm Galp soared 20.6 per cent to a 16-year high after it said its Mopane field off the coast of Namibia could have at least 10 billion barrels of oil.
Sources told Reuters Galp has launched the sale of half of its stake in the exploration block that includes the Mopane field.
Shares of Alstom gained 2.3 per cent after the French train manufacturer agreed to sell its North American conventional rail signalling business to German rail systems manufacturer Knorr-Bremse AG for around 630 million euros (S$913.7 million).
Embracer said it plans to split into three separate listed companies, and that it has secured new financing that it will use to cut debt, sending shares of the Swedish gaming group higher by 8.6 per cent.
Iveco dropped 2.2 per cent after the automotive manufacturer said chief executive officer Gerrit Marx is leaving to head Italian-American company CNH Industrial. REUTERS
