Europe: Shares retreat after Powell-induced rally, JDE Peet’s soars
EUROPEAN shares closed lower on Monday, giving back Friday’s gains on optimism around US monetary policy easing, while JDE Peet’s soared on a buyout deal.
European markets came under pressure following Friday’s surge when US Federal Reserve Chair Jerome Powell pointed to a possible interest rate cut next month, citing rising risks to the job market.
The pan-European Stoxx 600 index closed 0.4 per cent lower at 558.82 in its worst day in over three weeks but was about 1 per cent away from record highs.
Germany’s DAX dropped 0.4 per cent and France’s CAC 40 slid 1.6 per cent. The UK market was closed for a public holiday.
“Powell didn’t really change the narrative as much as the US market portrayed, but Europe was definitely part of the global party on Friday,” said Steve Sosnick, chief market analyst at Interactive Brokers, adding that investors were booking some profits on Monday.
Construction and materials stocks were the heaviest drags on the index, with Nibe Industrier down 7.9 per cent.
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Utilities logged their steepest decline in more than a month. Orsted plunged 16.4 per cent to a record low after the US halted the Danish company’s Revolution Wind project off Rhode Island amid President Donald Trump’s pushback on renewable energy investments.
Peers such as Vestas Wind, EDP Renovaveis and Siemens Energy also lost ground.
JDE Peet’s touched a near three-year peak and was last up 17.5 per cent, after Keurig Dr Pepper agreed a deal to buy the company for 15.7 billion euros (S$23.7 billion) in cash.
Five sources told Reuters that the European Central Bank is likely to keep interest rates steady next month, but discussions about further cuts may resume in the autumn if the economy weakens.
The ECB left its key rate at 2 per cent, bringing a year-long easing cycle to an end and leading investors to bet on a prolonged pause.
Sosnick said a pause was not necessarily a “bad thing” if an economy was holding up, since the ECB had aggressively cut rates over the last several months.
Puma SE surged 15.9 per cent after Bloomberg reported that the holding company of France’s Pinault family was weighing options for its 29 per cent stake in the German sportswear maker, including sounding out potential buyers.
Argenx rose 4.3 per cent after RBC started coverage with “outperform” on strong belief in its Vyvgart medicine.
Valneva slumped 22.2 per cent after the US drug regulator suspended the French drugmaker’s licence for chikungunya vaccine Ixchiq with immediate effect.
This week, focus will be on US AI darling Nvidia’s quarterly report for signs its US$4 trillion valuation is justified.
On the tariff front, Switzerland hoped to finalise a new business offer for Washington soon to escape Trump’s 39 per cent tariffs. REUTERS
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