European banks’ powerful recovery on Wednesday contributed to the most significant single-day growth of Europe’s chief stock index since November, despite a slump from market capitalisation heavyweight Novo Nordisk after it lowered its profit forecast for the full year.
This activity indicates a persistent improvement in investor morale, as evidenced by the volatility index, or “fear gauge,” which dropped for the second consecutive day after hitting its peak in March 2022 earlier in the week.
In Dublin, the Iseq index ended positively for two days straight, increasing by 1.35% on Wednesday following a 0.6% increase in Tuesday’s trade, bouncing back from global sell-offs on Monday. On a successful day for European banking shares, AIB and Bank of Ireland both showcased robust performance, with AIB going up 3.3% to €5.01 and Bank of Ireland’s closing up 3.7% at €9.53.
While Ryanair experienced a modest 0.25% increase, reaching €14.17, insulation maker Kingspan saw a 1.6% increase to €81.05. The Kerry Group was one of the few shares to close negatively, with the food behemoth dropping 0.5% to €85.95.
In London, the esteemed FTSE 100 index soared 1.8%, marking its best performance in over four months, while the FTSE 250 index, primarily comprised of medium-capitalised companies, closed 1% higher.
HSBC, Lloyds Banking, and Barclays were among the FTSE 100 index’s top performers, with the investment banking and brokerage sector surging 1.5%. Quilter, a wealth manager, experienced a 4.6% increase after announcing half-year earnings that surpassed expectations.
Moreover, plunging oil prices precipitated a rise for energy firms BP and Shell.
Despite the recovery, WPP saw a drop of 2% after the advertisement giant downgraded its yearly revenue growth prediction and conceded to offload its majority stake in FGS Global to KKR. Despite uplifted annual operating profit, first-half revenue forecasts, and increased revenues, Coca-Cola bottler HBC dipped 1.5%.
The pan-European Stoxx 600 experienced a 1.5% uplift but didn’t exceed the significant 500-point mark due to a recent slump prompted by fears of a US recession. Major indices in Germany, France, and Spain also witnessed a rise, ranging from 1.5% to 2%.
Banking indexes led the way in sector gains, surging by 2.7% – the largest single-day hike in over a year, despite a plunge of 11% in the past five days. One bank to note was ABN Amro, who saw a 5.6% rise after enhancing its annual net interest income predictions.
Significant market fluctuations included Novo Nordisk, whose disappointing profit forecasts and softer-than-anticipated Wegovy weight-loss drug sales led to the largest single-day drop since August 2022 at 6.7%. This sparked concerns over increasing rivalry from Eli Lilly.
German activewear manufacturer Puma dropped 10.8% following the reduction of its full-year core profit forecast. Contrastingly, pharmaceutical corporation Roche experienced a 3% hike due to reports suggesting the potential divestiture of cancer-data specialist unit, Flatiron Health.
Shipping conglomerate Maersk suffered a 2.3% drop following Q2 results, which included an increased capital expenditure outlook considered detrimental by industry analysts. The firm also anticipates a reduced pace in global container shipping growth after a strong start in the current year.
Turning to Wall Street, main indices showed an upward trend in initial trading, assisted by mega-cap stock growth and Japan’s top policymaker’s dovish stance following an unexpected interest rate increase last week. This was a contributing factor to the high volatility present across global markets.
The majority of tech stocks showed at least a 2% increase. However, Tesla experienced a small dip of nearly 1%.
Prominent gainers included cybersecurity company, Fortinet, whose shares leapt by 24.6% after an uplift in its yearly revenue forecast.
On the contrary, Airbnb fell by 12.7% – its most significant single-day fall, as it projected Q3 revenue below expectations and cautioned about shorter booking timeframes. This suggests holidaymakers are holding off on booking due to fiscal unpredictability.
Entertainment giant Walt Disney also experienced a 1.9% drop, forecasting reduced demand at its amusement park division in subsequent quarters.