Travel stocks lead European stocks higher as airlines soar

European stocks ended higher on Thursday, with travel stocks leading gains after Ryanair expressed confidence in a recovery this year.

Bond yields have retreated from recent highs, easing pressure on equities. The pan-European Stoxx 600 closed 0.5% higher, overcoming early losses and extending a rally into a second straight session. Travel stocks were the best performing European sector, rising 2.9%.

Broader European equities benefited from German bond yields falling below 0%, pulling back from a string of solid gains this week. Utilities and technology stocks rose 1.7% and 1.5%, respectively. Both sectors generally tend to underperform in high rate environments and have fallen significantly this year.

DUBLIN

Ryanair led the charge on Dublin’s Iseq, up 4.2% to €16.90. The airline has announced it will fly to 120 destinations from Dublin this summer in what it says will be its biggest ever schedule from the Irish airport.

AIB and Bank of Ireland both traded lower, falling 4% and 2.2% respectively, as the likelihood of a European Central Bank rate hike this year was extinguished by the ECB chief, Christine Lagarde. She said euro zone inflation would gradually decline over the year, adding that the ECB did not need to act as boldly as the US Fed due to a different economic situation.

insulation manufacturer Kingspan gained 2.2% to close at €90.38. Hotel Group Dalata traded but not as much as other travel-related stocks, rising 0.4% to €3.99.

LONDON

London’s FTSE 100 fell on Thursday on weakness in oil stocks and GlaxoSmithKline, while food delivery platform Deliveroo surged on growth in orders hitting the top of its outlook range. The blue chip index ended down 0.1%, dragged down by oil majors Royal Dutch Shell and BP as they followed lower crude oil prices. GlaxoSmithKline fell 1.8% and was one of the biggest losers on the FTSE 100 after consumer goods giant Unilever effectively ended its pursuit of a business on Wednesday that the pharmaceutical company plans to divest more late this year.

Food delivery company Deliveroo rose 1.4% on strong order value growth in the fourth quarter, pushing it to the top of its outlook range for the year.

British Prime Minister Boris Johnson announced on Wednesday the end of Covid-19 measures, including mandatory face masks in England. The domestically-focused mid-cap index rose 0.3%.

Primark owner Associated British Foods fell 4.2% after saying the spread of the Omicron variant of the coronavirus reduced the number of shoppers in December. Premier Foods was among the top mid-cap gainers, up 7.8%, and said it expects full-year earnings to beat market expectations as its Mr Kipling brand achieved its best Christmas sales.

EUROPE

The broad Stoxx 600 index struggled to find its bearings this week as investors worried about soaring inflation and a possible policy tightening this year. Positive earnings updates and commodity-related gains, however, bolstered sentiment. Data showed German producer prices rose at a record pace in December, driven by rising energy prices.

“Investors are eyeing the best port of call in a world where money stops hanging around and cherished growth stocks are starting to look less attractive,” said AJ Bell financial analyst Danni Hewson. Metal-cutting tool and mining gear maker Sandvik rose 1.3% after posting quarterly profits just above analysts’ expectations and noting strong demand. German sportswear maker Puma rose 1.2% after posting higher-than-expected preliminary quarterly sales and core profit.

NEW YORK

U.S. stock indices rose on strong earnings reports on Thursday, as bargain hunting boosted mega-cap growth companies after the Nasdaq index dipped into correction territory in the previous session. The Nasdaq has had a tough two months since hitting a record high in November. Recovering somewhat from Wednesday’s selloff, growth companies Microsoft and Tesla gained 2.5% and 3.8% respectively.

The S&P 500 consumer discretionary, technology and communications sectors were the sectors that gained the most on the benchmark. Netflix, which is expected to launch big business earnings growth after the market close, rose 1.4%. – Additional reporting: Reuters

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