Stoxx 600 gains for a third week with focus on Middle East peace talks

[BENGALURU] European equities edged higher on Friday (Apr 10), notching up a third straight week of gains as cautious optimism ahead of US-Iran weekend talks outweighed frictions in a fragile ceasefire.

The pan-European index Stoxx 600 ended 0.4 per cent higher at 614.84 points. The index is up 3 per cent for the week.

Most bourses also gained, with France’s CAC 40 and Spain’s IBEX 35 adding 0.2 per cent and 0.6 per cent, respectively.

European shares logged their strongest one-day rise in more than four years on Wednesday on news of a US-Iran ceasefire, helping the Stoxx 600 claw back some of the losses incurred since hostilities began on Feb 28.

“Investor sentiment continues to fluctuate amid uncertainty about the durability of the two-week Middle-East ceasefire agreement,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

“While volatility is likely to remain in the near term, we continue to believe that exposure to structural trends will remain a key differentiator for equity market performance over the long run,” he added.

Investors will closely monitor the talks, especially efforts to reopen the Strait of Hormuz, a vital waterway for global energy supplies. Europe’s airport industry has warned that the continent could face a systemic jet fuel shortage within three weeks if it remains closed.

Stoxx 600 companies are expected to report growth of 4.2 per cent in first-quarter earnings, according to LSEG data, slightly higher than the 4 per cent rise estimated last week.

Meanwhile, the aerospace and defence index fell 2.2 per cent after a Bloomberg report that Ukraine and Russia were heading towards a potential deal.

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European shares pull back as fragile US-Iran truce weighs on sentiment

Germany’s Rheinmetall and Hensoldt and Italy’s Leonardo fell more than 5 per cent and CSG was off by 8 per cent.

Construction stocks gained with Buzzi, Holcim and Heidelberg Materials up between 3 per cent and 5.6 per cent. Financials and tech shares boosted the index, with gains of 1.3 per cent each. Europe’s luxury sector gained 0.9 per cent after Italy’s Brunello Cucinelli rose 5.3 per cent on first-quarter revenue above expectations. Among other movers, Sodexo shares fell 10 per cent to a six-year low after the French food caterer slashed its annual sales and profitability targets.

Repsol fell 5.8 per cent after the Spanish energy company published a worse-than-expected first-quarter trading update. In the US, consumer prices increased by the most in nearly four years in March as the Iran war led to a surge in oil prices. Markets will continue to monitor inflation data closely to gauge the global economic impact of the conflict. REUTERS