Europe: Shares rise as bond yields retreat, Big Pharma rallies
EUROPEAN shares began the week on a strong footing, boosted by a drop in bond yields with investors assessing key inflation data, while Siemens Energy shares extended their recovery on continued talks over project-related guarantees.
The pan-European Stoxx 600 gained 0.4 per cent after falling more than 4 per cent in the past two weeks.
Aiding equities, euro area sovereign bond yields dropped with investors reckoning that markets have broadly priced in a higher-for-longer outlook for policy rates.
Data showed inflation in Germany’s most populous state of North Rhine-Westphalia eased in October, while Spain’s 12-month inflation in October was unchanged from the previous month at 3.5 per cent.
Another set showed the German economy shrank slightly in the third quarter as Europe’s largest economy continues to be weighed down by weak purchasing power and higher interest rates.
“The German economy is likely to contract somewhat further in the winter half-year because it is suffering from the massive rate hikes by the ECB and almost all Western central banks,” Commerzbank analysts wrote in a note.
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“At the same time, consumption is unlikely to recover.”
The German DAX closed 0.2 per cent higher, but Infineon Technologies dropped 6.4 per cent to the bottom of the Stoxx index following a price target cut from Stifel.
For the week, investors will keep a close eye on policy announcements from Japan, the US and the UK. Europe’s inflation data will also be monitored after the European Central Bank left interest rates unchanged last week.
The healthcare sector was the top boost with a 1.1 per cent rise, aided by a more than 2 per cent jump each in Novo Nordisk and Sanofi.
“News that the EMA (European Medicines Agency) has found no evidence that two of Novo Nordisk’s most popular drugs increase the risk of cancer seems to have flown slightly under the radar,” said Danni Hewson, head of financial analysis at AJ Bell.
Sanofi recovered from Friday’s plunge when it announced it was abandoning its 2025 profit target.
Siemens Energy jumped 12.7 per cent to the top of the Stoxx 600 after Chairman Joe Kaeser said the company does not need money from the state, while talks with Berlin over project-related guarantees continued.
Dassault Systemes rose 2.3 per cent after JPMorgan upgraded the French software maker to “overweight” from “underweight” on improved license trajectory and large deals return.
On the flip side, ArcelorMittal dropped 3.9 per cent after confirming discussions to nationalise its Kazakh coal mine in which at least 45 people died in a fire over the weekend.
HSBC fell 2.3 per cent after Europe’s largest bank doubled its quarterly profit but missed estimates. REUTERS
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