Irish bank shares join in rally ahead of ECB meeting this week

The European banking sector jumped 1.3%

Mon, 22 Jan, 2024 - 19:45

Irish bank shares and other leading stocks in Dublin joined in a buying spree with the rest of Europe as stock markets tracked a Wall Street rally that drove the US benchmark S&P 500 to fresh record highs, while investors awaited the European Central Bank's (ECB's) policy decision later this week.

The pan-European Stoxx 600 index ended 0.8% higher following a 1.5% decline last week. The S&P 500 index in the US logged a fresh record high in the trading session, topping the all-time peak it hit last week that was fuelled by a rally in US chipmakers and heavyweight technology stocks.

Government bond yields, or the implied cost of borrowing across the eurozone, eased, with the benchmark German 10-year government bond trading at 2.25%, and the equivalent bond for the Irish Government at 2.75%. Investors are waiting for the ECB's monetary policy decision, due on Thursday, for clues on the timing of future interest rate cuts.

Traders have priced in a cut of about 1.3% in interest rates this year, with a 96% chance of the first cut coming in June. The European banking sector jumped 1.3%, helped by a 2.8% gain in Barclays after an upbeat view from Morgan Stanley, ahead of the British bank's annual results and investor update next month. Shares in AIB and Bank of Ireland rose by as much as 2%.

On the downside, Commerzbank shed 3.4% after Bank of America Global Research cut the German lender to "underperform" from "neutral".

Italian shares were an outlier, down 0.3%, weighed down by a 2.2% fall in luxury car maker Ferrari.

Among other movers, shares of Kindred jumped almost 17% after French gaming company La Francaise des Jeux launched a takeover offer for its European online peer.