Europe: Shares end slightly higher as financials offset gains in energy stocks
EUROPEAN equities ended marginally higher on Monday (Jan 29) after hitting two-year highs in the previous session, propped up by rising energy shares, while losses in telecoms and financial stocks kept the gains in check.
The pan-European Stoxx 600 index closed 0.2 per cent higher, hovering near its highest level in two years hit on Friday, coming off its best weekly performance in three months.
Oil and gas stocks held on to their gains during the day, adding 1.0 per cent, while crude oil prices lost steam in a choppy session.
On the downside, telecoms eased 0.8 per cent with Finnish firm Elisa falling 4.5 per cent after brokerage Inderes downgraded its rating to “reduce”.
Banks dipped 0.5 per cent, while financials lost 0.4 per cent, bogged down by a 3.7 per cent fall in Schroders after Exane BNP Paribas downgraded the UK fund manager’s shares and Jefferies raised concerns about the company’s prices-earnings premium.
Looking ahead, investor focus will now be on the US Federal Reserve’s interest rate decision later this week, with bets of a pause fully baked in and traders split nearly evenly about the first cut coming in March, according to the CME FedWatch Tool.
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“The Fed has a dual mandate – inflation and employment,” said Daniela Hathorn, senior market analyst at Capital.com.
“Whilst the former has come a long way in the last year, the jobs market remains very tight ... in the past, (Fed chair) Powell has insisted on the need to see some weakness in the labour market to consider loosening financing conditions.”
In Europe, the European Central Bank’s (ECB) next move will be an interest rate cut but policymakers speaking on Monday differed on the timing of the move and the trigger for action.
Government bond yields across the continent eased as markets fully priced in a first 25 basis point rate cut by the ECB in April.
Among stocks headlining on Monday, Holcim jumped 4.7 per cent after the Swiss building materials giant said it would spin off its North American operations.
Bayer lost 4.9 per cent after the German company was ordered to pay US$2.25 billion in damages in its ongoing litigation linked to an alleged carcinogenic effect of its Roundup weedkiller.
Philips fell 4.4 per cent after the health technology firm agreed on the terms of a settlement with the US Food and Drug Administration over a large-scale recall of ventilators.
Spain’s Supreme Court dismissed a four billion euros (S$5.8 billion) claim filed by toll-road operator Abertis against the Spanish government over a highway concession.
Shares of ACS and Hochtief, which have a 50 per cent and 20 per cent stake in Abertis, fell 10.0 per cent and 9.1 per cent, respectively. REUTERS
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