European stocks ended on a negative note last Friday, although they managed to recover from their lowest point in over a month, as worry over escalating turmoil in the Middle East seemed to abate. This easing of tensions came along with a markedly successful day for French beauty powerhouse L’Oreal, following their strong results, which marked the best performance since early January.
The pan-European Stoxx 600 index closed the day 0.1 per cent lower, marking its largest weekly drop since mid-January – a fall of 1.2 per cent. This drop was driven by a refocused attention on geopolitical conflicts which led investors to shy away from high-risk assets, alongside a significant drop in tech stocks.
Against the backdrop of heightened tensions, explosions occurred in an Iranian city, reported to be an Israeli offensive. However, Tehran played down the incident and stated that it had no intentions to retaliate – a move interpreted as a preventive measure against widespread war.
Equiti Capital’s chief economist, Stuart Cole, explained that Israel’s response was less vehement than anticipated and, so far, Iran seems to have perceived this as a cue to deescalate its actions, suggesting that both parties should step back.
In Dublin, mixed performances were recorded amongst financial firms, with AIB falling 0.3 per cent whilst its competitor, Bank of Ireland, rose by the same amount. Meanwhile, PTSB saw no change in its stock value after it confirmed a 4.7 per cent pay rise in 2024 for its personnel, following negotiations with the Financial Services Union and Mandate.
For housebuilder Cairn, stocks fell 2 per cent ending the day at €1.97 as the Central Statistics Office hinted at an acceleration in house price inflation beyond 6 per cent for February. Concurrently, Ryanair’s share price fell by 0.6 per cent at €20.43 amidst the Middle Eastern unrest, causing oil market fluctuation.
As for significant earnings, notable beauty company L’Oreal saw its stock surge 5 per cent after surpassing its first quarter sales forecasts. Schneider Electric’s stocks fell 3.2 per cent as the French firm engaged in discussions with US-based engineering software producer, Bentley Systems, for a potential strategic deal. Danish beer manufacturer, Royal Unibrew, saw its stocks leap an impressive 18.1 per cent after exceeding Q1 expectations and boosting its annual forecast.
Warehouses De Pauw witnessed a rise of 3.1 per cent after demonstrating evidence of stability in its first-quarter rental portfolio. As the corporate reports flood in over the coming weeks, there is an anticipation for a 12.1 per cent decrease in first-quarter earnings compared to the same period last year, based on LSEG data published on Tuesday.
In other developments, after Chinese multinational, Geely Holding, sold a portion of its shares, Swedish lorry manufacturer – Volvo, saw a decrease of 4.1 per cent in their stake value.
On Friday, the FTSE 100 index experienced a surge in the UK, following the Bank of England’s deputy governor, Dave Ramsden’s remarks hinting at a weakened inflation. This has further raised speculation of the central bank’s decision to ease monetary policy in 2024. Nevertheless, ongoing tensions in the Middle East continue to cast a pall on the market mood.
For most of Friday’s trading session, the primary UK equity indices remained in negative territory. However, the FTSE 100 reversed the trend by climbing 0.2 per cent in the final hour, while the midcap FTSE 250 fell by 0.3 per cent.
On the FTSE 100 index, the British paper and packaging firm, Mondi, topped with an increase of 9.3 per cent after refuting claims of making a proposal to acquire DS Smith, which had just sealed a £5.8 billion deal with International Paper. This news led to a 10.3 per cent dip in DS Smith shares and placed it at the bottom of the benchmark index.
In the USA, both the Nasdaq and the S&P 500 indexes were in the negative on Friday, largely owing to Netflix’s disappointing quarterly forecast that also made it one of the largest drags on the index. Hopes of an imminent rate cut by the Federal Reserve also seemed to dwindle, imparting a bearish sentiment.
Netflix experienced an 8.3 per cent slump after an unexpectedly decided to halt the provision of subscriber counts and its projected Q2 revenue fell short of analysts’ estimations. This led to both the S&P 500 and the Dow Jones Industrial Average preparing for a third consecutive weekly decline, with the Nasdaq geared towards a fourth weekly fall if the current trend continues. On a brighter note, better-than-expected Q1 profits reported by American Express provided some relief to the blue-chip Dow, boosting its shares by 4.6 per cent.
The burden of the market sell-off heavily impacted shares related to semiconductors, seeing Nvidia, a leader in Artificial Intelligence, experiencing a decline of 3.1 percent. Concurrently, the Philadelphia Semiconductor Index suffered a 2 percent downturn, placing it on course for the poorest weekly showing yet this year. – Further coverage by Reuters.