Europe midday: Stocks push higher as Ryanair, Ericsson rally

Joshua Mahony, market analyst at IG, said: “Today largely represents the calm before the storm, with the likes of the FOMC and BoJ expected to spark significant volatility and unpredictability as the week progresses.

“This week sees close to 200 of the S&P500 firms announce earnings, which brings a whole different element into the fold alongside economic event risk. Inaction from both the BoE and ECB point towards a measured approach from the central banks despite the fears of what may come after the EU referendum result. However, amid the widespread expectations of action from the BoJ, the committee is in a catch 22 situation where they almost need to act simply to avoid the appreciation that would happen to the yen otherwise.”

At midday, the benchmark Stoxx Europe 600 index was up 0.5%, Germany’s DAX was 0.9% stronger and France’s CAC 40 was up 0.6%.

At the same time, oil prices were in the red. West Texas Intermediate was down 0.7% at $43.87 a barrel while Brent crude was 0.7% lower at $45.38.

Over the weekend, finance chiefs at the G20 summit in China said the UK’s decision to leave the European Union has heightened risks for the global economy and called on the UK to remain a close partner of the EU. However, the G20 said it has the tools requited to deal with the potential fallout from Brexit.

On the corporate front, Ericsson rallied as the company’s chief executive Hans Vestberg stepped down after six and a half years.

Ryanair flew higher after posting a rise in first-quarter profit as traffic grew and the low-cost carrier maintained its guidance that full-year profit would increase by around 12%, although it warned of “significant risks” post Brexit.

Shopping centres group Hammerson was a touch higher after it said net rental income in the six months to 30 June improved 5.1% to £167.7m, or 2.1% on a like-for-like basis.

Deal news was in focus in London, with bookmarker William Hill surging after it received a merger offer from 888 and Rank Group.

On the downside, Philips nudged lower after the Dutch healthcare firm reported second-quarter results broadly as expected.

In macroeconomic news, German business confidence for July came in stronger than expected, according to a widely-followed survey.

The IFO Institute’s business climate index came in at 108.3, down from 108.7 the previous month but ahead of economists’ expectations for a reading of 107.5.

Meanwhile, the expectations index fell to 102.2 from 103.1 in June, beating expectations of 101.2, while the index of current conditions nudged up to 114.7 from 114.6, ahead of estimates of 114.0.

Capital Economics said the survey revealed little damage from the Brexit vote.

“The small fall in the headline Business Climate Indicator, from 108.7 to 108.3, was better than the consensus forecast of a fall 107.5 and our own expectation of a slightly sharper fall. At this level, the index points to annual GDP growth of close to 2%, consistent with quarterly gains in GDP of 0.5% or so. The index measuring current conditions even rose a little, suggesting that the weak tone of the hard data in Q2 may not be sustained into the third quarter.”

This week will see rate announcements from the Federal Open Market Committee and the Bank of Japan on Wednesday and Friday, respectively.