Shares trade higher but focus remains on Middle East conflict

Investors remained risk-averse on prospects of escalation in Israel's attack on Gaza in the wake of the Hamas attacks

Mon, 16 Oct, 2023 - 19:37

European shares kicked off the week on a higher note, but investors remained risk-averse on prospects of escalation in the Middle East conflict.

The Stoxx 600 index of leading companies closed slightly higher with miners and retail stocks leading gains.

Among other stocks, Frankfurt-listed shares of BioNTech fell by more than 7% after partner Pfizer last week slashed its full-year revenue forecast on lower sales of its covid vaccine and treatment.

In Ireland, AIB shares ended 2% higher, but Bank of Ireland and Permanent TSB closed unchanged in the session. Shares in Kerry Group also rose by 2%.

Israeli forces kept up their bombardment of Gaza after diplomatic efforts to arrange a ceasefire to allow foreign citizens to leave and aid to be brought into the besieged Palestinian enclave continued.

Concerns of a resilient eurozone labour market and fears over the Middle East conflict have kept investors on the edge recently, although dovish commentary from a US Federal Reserve policymaker soothed some nerves.

“There is still a bit of a risk averse sentiment around,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Elsewhere, Poland’s WIG20 index .WIG20 rose 5.3%, outperforming other European indices after opposition looked on track to form the next government after official partial results and exit polls showed the ruling nationalists losing their parliamentary majority.

Meanwhile, Italy’s government approved a budget for next year with measures worth around €24bn in tax cuts and increased spending, despite market concerns over the country’s strained public finances.