Europe: Shares hold steady, Spanish stocks lag on election jitters

    • The pan-European Stoxx 600 edged up 0.1 per cent, hovering near its five-week highs.
    • The pan-European Stoxx 600 edged up 0.1 per cent, hovering near its five-week highs. PHOTO: BLOOMBERG
    Published Tue, Jul 25, 2023 · 06:00 AM

    EUROPEAN shares were marginally higher on Monday (Jul 24) as gains in energy firms and telecom stocks were countered by worsening fears of recession in the eurozone and losses in Spanish stocks after the country’s general election yielded no clear winner.

    Spain’s benchmark IBEX index was down 0.3 per cent, having hit a near one-week low earlier in the session, following results from Sunday’s vote which denied both the left and the right bloc an easy path to form a government, pointing to a political gridlock and raising nervousness among investors.

    Shares of Madrid-listed utilities, which had priced in a victory for right-wing parties, fell, with Endesa and Iberdrola down 2.7 per cent and 0.5 per cent, respectively.

    A gauge of Spanish lenders that includes Banco de Sabadell, Banco Santander and Caixabank fell 0.3 per cent.

    However, the pan-European Stoxx 600 edged up 0.1 per cent, hovering near its five-week highs.

    A survey showed the downturn in eurozone business activity deepened much more than expected in July as demand in the bloc’s dominant services industry declined and factory output fell at the fastest pace since Covid-19 first took hold.

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    “There has been some mild underperformance from the Spanish equities today but this is couched in the context of weakness across eurozone equities generally in the wake of the release of today’s purchasing manager surveys which painted a great downbeat perception across the base for the regional economy,” said Jeremy Batstone-Carr, European strategist at Raymond James.

    Markets have priced in a quarter percentage point increase in interest rates to 3.75 per cent by the ECB later this week, but what it will do after July is less certain.

    Irish stocks led losses on the index, down 0.9 per cent, dragged by a 6.1 per cent fall in Ryanair after the airline forecast weak traffic for the year 2024.

    Capping declines, energy shares added 1.5 per cent as crude prices rose on tightening supply and hopes for Chinese stimulus measures.

    Boosting the telecom sector, Vodafone Group rallied 4.1 per cent after it reported an acceleration in first-quarter top-line growth.

    Among other stocks, Bavarian Nordic tumbled 26.0 per cent to an over one-year low after the Denmark-based company said it was ending its respiratory syncytial virus (RSV) vaccine programme.

    Dutch health technology company Philips slid 5.8 per cent as it posted a fourth straight drop in order intake on Monday.

    Swiss private bank Julius Baer climbed 8.4 per cent after it reported an 18 per cent increase in net profit for the first half of 2023. REUTERS

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