European stocks saw an increase on Monday, recovering some of the significant drop observed the previous week. The lift was principally led by gains in the technological and financial sectors. However, Ryanair spearheaded a decline within the airline industry, due to a noticeable drop in their quarterly profits.
The pan-European Stoxx 600 index rose by 0.9 per cent, ending a five-day downturn. This was a pattern last observed in October 2023.
Most sector indices saw a rise at closing; technology shares increased by 1.8 per cent, recovering from their largest weekly plunge in over three years. This rebound was largely due to specific chip shares that had suffered from the previous week’s global sell-off triggered by investor concerns related to potential US trade restrictions.
Despite the generally positive trend, Ryanair shares fell sharply by 17.2 per cent, reaching €13.62. This was following an approximately 50 per cent fall in the airline’s profits for the first quarter of their fiscal year ending in June, resulting from a 15 per cent drop in ticket prices compared to the same time last year. The airline reported an after-tax profit of €360 million, which fell significantly short of the €538 million forecast predicted in a company poll of analysts.
Luxury firms with exposure to China, including LVMH, Kering, and Hugo Boss saw a rise between 1.2 per cent and 4.3 per cent, after a surprising move by Beijing to cut both short and long-term interest rates. This was China’s first such comprehensive action since August of the previous year.
A combination of political uncertainty in the United States and a chip sell-off resulted in the benchmark index recording its largest weekly drop in 2024. On top of this, the market was affected by a lack of policy direction from the European Central Bank (ECB). ECB official Peter Kazimir however, suggested that there could be two more interest rate cuts before the end of the year, if justified by data.
Major banks from Spain, France, Germany, and Italy among others, such as Santander, BNP Paribas, Deutsche Bank, and UniCredit are preparing to announce their financial results for the recent quarter as this week progresses.
In London, the market displayed a strengthened performance on Monday, bouncing back from worry surrounding Microsoft’s IT failure which had wider implications across numerous sectors. Despite this event and Joe Biden’s withdrawal from the ensemble of US presidential candidates, trading maintained a positive momentum at the week’s start.
Nonetheless, there was a noticeable decline with airlines in the London sector after news broke from Ryanair. The FTSE 100 ended the day up by 43.06 points, a rise of 0.53%, concluding at 8,198.78. Corporate news revealed Entain, the company who owns Ladbrokes and Coral, experienced growth after appointing Gavin Isaacs as the new CEO. Isaacs, ex-chairman of Games Global and former board member of Entain’s American competitor, DraftKings, will start his tenure on the 2nd of September.
Rentokil experienced the highest rise in the FTSE 100 following weekend rumours of a possible takeover supported by private equity.
Across the pond in New York, the S&P 500 and Nasdaq made up some lost ground from the previous week on the Monday, as investors reevaluated the feasibility of a second term for the Republican candidate Donald Trump, following the current president Joe Biden’s exit from the race.
After a three-day downturn, stocks bounced back, with large-scale companies such as Alphabet, Meta Platforms, and Tesla experiencing gains between 1.8% and 3%. The Information Technology index led sector gains and is likely to break its four day downward trend.
Stocks linked to Trump experienced mixed results, with Trump Media & Technology Group dropping 2.4%, conversely software company Phunware rose 1.4%.
Cybersecurity company CrowdStrike nosedived by 12.9%, continuing a downturn sparked by the company’s recent software update, the cause of Friday’s global tech failure. Delta Air Lines also suffered a 1.9% loss after having to cancel more than 600 flights due to ongoing issues from the IT failure.
Nvidia, the leading AI chip manufacturer, saw a 2.5 per cent increase in their shares following a Reuters report. The report detailed Nvidia’s effort to devise a variant of its groundbreaking AI chips, specifically targeting the Chinese market. Importantly, the plan stipulates that this version should conform to the prevailing U.S. export regulations. Reuters contributed additional information to this report.