The upward momentum of European stocks was broken after a three-day run of profits on Monday, with trading activity being low due to the bank holiday in the UK. The pan-European Stoxx 600 index closed the trading session with a slight drop of 0.02 per cent, though it was still hovering around its highest level in a month.
Dublin’s Iseq All-Share index, however, bucked the trend by climbing 0.8 per cent to 9,631.49. Shares of banks were particularly popular, with AIB, Bank of Ireland and PTSB seeing growth between 0.9 per cent and 2.8 per cent. This is largely attributable to remarks made by ECB chief economist Philip Lane. Over the weekend, he emphasised that the ongoing struggle to increase inflation to 2 per cent is still not won. Lane also stated that interest rates must remain at whatever level is needed to achieve this inflation target. This benefits banks as higher interest rates can increase their income.
The building sector also saw minor increases rooted in a continual rise in house prices. Housebuilders Cairn Homes and Glenveagh Properties witnessed their share prices rise 0.8 per cent and 0.7 per cent respectively. Meanwhile, shares in Corrie Energy surged by nearly 42 per cent to 17 cents, following a significant sell-off the previous week after the interim chairman’s resignation and the company’s ongoing efforts to secure more short-term financing whilst pursuing long-term investment.
Ryanair’s shares, conversely, slid 0.6 per cent to €15.15 as oil prices reacted to geopolitical tension in the Middle East.
In Europe, the key German stock index did pare back some of its losses incurred earlier in the day and ended the session down by approximately 0.1 per cent. This occurred in the wake of a survey that indicated a decrease in business confidence in Europe’s biggest economy in August. In addition, a range of important German economic data is due to be released this week, including GDP figures, employment statistics, and retail sales data. The energy sector made good gains of around 0.7 per cent as a result of oil prices escalating. An individual standout was Telecom Italia, which appreciated 2 per cent on reported news that Italian banker Claudio Costamagna is planning to assemble an investor pool interested in acquiring France’s Vivendi’s stake in the company.
The Swiss solar panel producer, Meyer Burger, however, had its worst trading day ever, with shares plummeting 45 per cent. This happened after the company shelved plans for a new facility in Colorado and postponed the announcement of its financial results.
Amidst fluctuating trades by mid-afternoon on Wall Street, the S&P 500 and the Nasdaq saw a dip, largely influenced by Nvidia, an AI favourite. This comes before Nvidia’s impending weekly results. A key inflation report is much anticipated and the probability of a slash in the interest rates by the Federal Reserve has been consolidated.
Chip stocks saw a decline, led by Nvidia, setting the Philadelphia SE Semiconductor index spiralling prior to Nvidia’s eagerly awaited weekly earnings.
As leading figures in the AI buzz, megacap stocks, of significant worth, have experienced lesser leniency in this quarter. The sharp surge of over 160% year-to-date in Nvidia’s earnings, propelling it to the second spot in market cap value, slightly beneath Apple, will be put to the test to defend this rise.
Kim Forrest, CIO at Bokeh Capital Partners commented on Nvidia’s trajectory, stating that people are cashing in some profits and that the company’s six-month prediction will likely be the most pivotal information received this week.
Other expanding entities like Tesla, Meta, and Apple also experienced a fall. Conversely, due to reports of oil supply disruptions in light of the ongoing Middle Eastern geopolitical strife, the energy sector saw an uptick, with crude oil prices escalating.
Bounds were set on the decline of the blue-chip Dow, thanks to gains in other market sectors including consumer staples, such as Procter & Gamble, and financial stocks like American Express. Despite the Dow hitting record levels intraday, it also saw improvements.
Following Federal Reserve Chair Jerome Powell’s affirmation for a reduction in borrowing costs considering the decreasing risk of inflation and softening labour demand, the S&P 500 benchmark rallied over 1% on Friday, edging close to recording highs.
Market participants are currently weighing the likelihood of a quarter or a half percentage point decrease in the rate in September. Results from Dell, Salesforce, Dollar General, and Gap are to be revealed this week as well.
For more insights, Bloomberg and Reuters will be providing added updates.