European stocks climb on thin volumes with London closed

European stocks climbed on Thursday for the first day in three, led by cyclical stocks including consumer and auto companies. The Stoxx Europe 600 Index rose 0.6 per cent, reversing some of the previous session’s losses. Trading volumes were thin, with the UK market closed for Queen Elizabeth’s platinum jubilee. Investors were closely watching oil prices after delegates said Opec+ agreed on bigger increases in production for July and August. Markets in the region have been under pressure on worries that high inflation may lead to the European Central Bank acting more aggressively to raise interest rates, which could hurt the economy.

The Stoxx 600 fell in May, declining for the fourth month in the past five. This month may also be tricky: June has on average been the worst month of the year for European stocks over the past two decades. “We maintain a cautious view on equities as the main issues of inflation and central banks remain the key uncertainties, said Thomas Nugent, equities portfolio manager at Mapfre AM.

DUBLIN

Ryanair was one of the main movers in Dublin, climbing 1.5 per cent to €14.12 amid signs of increased oil supply from Opec. The airline has been scathing of the passenger queues seen at Dublin Airport and other airports in the past two weeks, suggesting the Army needs to be deployed in Dublin’s case. Insulations group Kingspan jumped 6.4 per cent to €77.66 per share. This follows a similar-sized fall on Wednesday. Building materials supplier CRH was up 1.3 per cent to €38.51.

Food groups Glanbia and Kerry traded down 2 per cent and 0.3 per cent respectively amid concern over the future buying power of consumers. “One of the big things for us in the food sector to watch over the next six to nine months is the impact those higher prices have on consumer-buying behaviour,” boss of Kerrygold owner Ornua John Jordan said this week. Hotel chain Dalata also fell 2 per cent, to €4.16.

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LONDON

The UK market closed for the queen’s platinum jubilee.

EUROPE

French spirits group Remy Cointreau climbed 4.9 per cent on beating full-year profit estimates and providing an upbeat outlook for this year and beyond. Other luxury stocks followed suit. LVMH, L’Oreal and EssilorLuxottica were up 1.7-3.1 per cent, providing the biggest boosts to the index. Oil stocks edged lower even as crude prices erased earlier losses after Opec+ agreed to boost crude output to compensate for a drop in Russian production. Shell’s Amsterdam listing and Equinor declined 0.5 per cent and 1.9 per cent respectively.

Data showed euro zone producer prices rose 1.2 per cent in April from the previous month, below economists’ expectations of a 2.3 per cent rise. This followed data earlier this week that showed consumer prices in the region rose to a record high. Government bond yields jumped to multi-year highs as inflation data this week boosted expectations that the European Central Bank might accelerate its tightening path. “The interest rate expectations are moving quite fast,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

NEW YORK

US stocks snapped a two-day slide as tech and consumer companies powered indexes higher on a day of mixed economic data, a revenue warning from Microsoft Corp and hawkish Federal Reserve comments. Oil also gained as Opec+ vowed to increase output.

The S&P 500 rose 1 per cent while the Nasdaq 100 added 1.8 per cent. Microsoft slumped after paring its outlook on the impact from the stronger dollar. Treasuries were steady, with the 10-year yield holding near 2.90 per cent.

Markets lacked clear direction ahead of Friday’s payroll report, with private hiring data on Thursday showing the smallest gain since the pandemic recovery began. Factory orders came in lower than forecast, adding to worries the economy is slowing while inflation remains stubbornly high. Fed vice-chairman Lael Brainard also said it was unlikely the central bank would stop raising rates after the next two meetings, where hikes of 50 basis points each are expected.

“Fed-friendly ADP and factory orders reports combined with a rational reaction to the Microsoft FX guide has investors feeling more constructive,” Art Hogan, chief market strategist at National Securities, said. “Add to all of that, Opec+ is increasing quotas, which will certainly help all of our number one concern, inflation.

Opec+ agreed to increase the size of its oil-supply hikes by about 50 per cent in July and August, bending to pressure by major consumers including the US to fill the gap created by sanctions on Russian supplies. Lower oil prices could ease inflationary pressures. Yet investors remain on edge as some fear the pace of monetary tightening could throw the economy into a recession.