Europe: Shares rebound after four-day losses on energy, healthcare boost
EUROPEAN shares snapped a four-day losing streak on Monday as energy and miners rose, tracking higher global commodity prices, while Danish drugmaker Novo Nordisk steered gains in the healthcare sector.
The pan-European Stoxx 600 ended 0.1 per cent higher, after rising as much as 0.9 per cent intraday, having closed at a six-week low on Friday.
“It’s a bit of bottom picking...Equity markets have fallen steadily since end-July as the market absorbed disappointment that the likes of the Federal Reserve and European Central Bank were not yet done with hiking rates,” said Stuart Cole, chief macro economist at Equiti Capital.
Capping gains in equities, however, were higher euro area yields as benchmark US 10-year Treasury yields climbed to fresh 15-year highs on the view that interest rates will remain higher for longer than initially anticipated.
Top metals and oil consumer China cut its one-year benchmark lending rate by a lower-than-expected 10 basis points to stimulate credit demand and also surprised markets by keeping the five-year rate unchanged.
Further, investors keenly awaited the Jackson Hole Symposium later this week, where ECB President Christine Lagarde and Fed Chair Jerome Powell are expected to provide clues about the interest rate outlook.
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Among major sectors, energy and miners added 0.6 per cent and 0.4 per cent, respectively, tracking higher crude oil and metals prices.
Europe’s healthcare index advanced 0.3 per cent as Novo Nordisk added 0.8 per cent after Morgan Stanley raised its price target on the drugmaker.
Luxury giants LVMH and Kering also rebounded 0.9 per cent and 1.2 per cent, respectively, after a six-day decline driven by concerns about China’s demand outlook.
German automotive supplier Continental surged 5.9 per cent to top the Stoxx 600 after a report on possible corporate restructuring that would involve sale of assets, aiding a 1.1 per cent rise in the automobiles index.
Meanwhile, UK homebuilders slid 3.5 per cent after residential housebuilder Crest Nicholson cut its full-year profit view and its shares tumbled 8.8 per cent.
Separately, an industry survey showed asking prices for homes in Britain fell sharply this month.
European real estate stocks fell 2 per cent, leading the decline among sector indexes.
Germany’s DAX rose 0.2 per cent even as official data showed a higher-than-expected fall in German producer prices in July.
In a monthly economic report, the Bundesbank said underlying inflation may have peaked but price pressures are easing too slowly and there is a growing risk it gets stuck above 2 per cent.
Demant gained 3.3 per cent after JPMorgan upgraded the Danish hearing aid maker to “Overweight” from “Neutral”.
Adyen slumped 8.6 per cent after two brokerages downgraded the Dutch digital payments firm’s stock after the company missed half-year expectations on Aug 17. REUTERS
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