Must read: European stock markets, oil prices, airlines rally

GLOBAL MARKETS

European markets have opened higher extending gains after a strong weekly performance. The travel and leisure sector is outperforming thanks to impressive results from Ryanair, lifting rivals with it. In Italy, Telecom Italia agreed to sell its land line business to US private equity giant KKR in a 22 billion euro mega deal. 

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The US nonfarm payrolls report on Friday saw 150k job additions in October, almost halving from 297k in September and shy of expectations for 180k. The weaker data helped to extend last week’s rally, with US stocks logging their best week in a year. The S&P 500 gained 5.9% last week while US Treasury yields retreated.

Investors are hoping that the Federal Reserve is at the peak of its tightening cycle, also fuelling gains for equities last week after a torrid month for price action in October. However, Warren Buffett is still feeling cautious towards stocks, with Berkshire Hathaway Inc Class B (NYSE:BRK.B)’s cash pile increasing to $157 billion in the third quarter and its share portfolio shrinking from $353 billion at the end of June to $319 billion. 

The Kospi index in South Korea surged almost 5.7% overnight, its best session since March 2020, after the authorities imposed a nearly eight-month ban on short selling. The move comes ahead of the country’s elections in April and could help drive more retail investors to participate in the market. 

On Sunday, Saudi Arabia and Russia announced plans to stick to their voluntary oil production cuts until the end of the year, lifting Brent crude and WTI prices. However, oil prices have come off the highs from September when Brent crude traded near $98 a barrel, its 2023 peak.

RYANAIR

Ryanair expects after-tax profit to hit between 1.85 billion euros and 2.05 billion euros for the full-year. This would be a record year for earnings at the low-cost carrier, outpacing its previous record from before the pandemic of 1.45 billion euros in 2018. It reported six-month earnings of 2.18 billion euros up 59% year-on-year with an 11% increase in passengers to 105 million. And it declared an ordinary dividend of 400 million euros or approximately 35 cents per share. 

Ryanair has been able to pass on additional cost pressures to consumers through higher airfares, with ticket prices likely to continue to go up next year. Plus, it has been enjoying a tailwind from strong demand post pandemic which it expects will be even stronger next year, despite cost-of-living pressures with elevated inflation and interest rates. Ryanair has also been more focussed than rivals on keeping its debt down – the airline expects it will be debt-free by the end of 2026.

Investors have lots to be cheerful about in this set of results including its better-than-expected earnings, its outlook, and its dividend announcement. Shares have staged impressive gains so far this year and the stock is up sharply again this morning, lifting other airlines like easyJet (LSE:EZJ), Wizz Air Holdings (LSE:WIZZ) and Air France-KLM (EURONEXT:AF) with it.