The Business Times

Europe: Shares rise as healthcare, leisure stocks gain

Published Sat, Aug 13, 2022 · 06:11 AM

EUROPEAN shares rose on Friday (Aug 12) after drugmakers rebounded following a slump in the previous session, and Flutter fanned a rally in the travel and leisure sector after an upbeat earnings forecast.

Shares in GSK, Sanofi and Haleon rose between 0.8 per cent and 3.6 per cent after the drugmakers said that nothing material had changed regarding US litigation focused on heartburn drug Zantac.

The stocks had fallen sharply this week on concerns over potential cancer-causing impurities that prompted the drug’s withdrawal from markets.

The European healthcare sector gained 0.2 per cent, with the Stoxx 600 index also rising 0.2 per cent.

“We raise (European) pharma from marketweight to overweight, as our macro projections imply scope for 10 per cent + outperformance by the first quarter next year after the sharp recent pull-back,” said Sebastian Raedler and Thomas Pearce, investment strategists at Bank of America.

But any rallies in the Stoxx 600 are not likely to last, they added. “The main prerequisite for a sustained rally is a trough in the macro cycle and renewed acceleration in growth momentum, but growth headwinds remain considerable.”


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Euro area PMI is likely to be weaker due to tightening credit, and low Russian gas deliveries raise the risk of winter rationing, which could tip the region into recession, the strategists added.

A European bank agreed to process a payment for the transit of Russian oil through Ukraine, sources said, removing the cause of a stoppage of oil supplies to central Europe last week.

Meanwhile, travel & leisure stocks jumped 3.9 per cent to more than two month highs, leading sectoral gains.

Flutter surged 14.4 per cent to the top of the travel index, as it saw no sign of cash-strapped customers betting less and gave another positive update on its rapidly growing US business.

Irish stocks added 2.7 per cent, boosted by Flutter.

The Stoxx 600 index, up for a third straight day, notched weekly gains of 1.2 per cent as positive earnings and a softer-than-expected US inflation reading calmed nerves around aggressive rate hikes by the Federal Reserve, though concerns remain over policymakers’ path.

European shares have fallen 9.6 per cent so far this year compared with a nearly 11 per cent decline for Wall Street’s S&P 500 index , which was largely dragged down by drops in big growth stocks in the first half of the year.

London stocks gained 0.5 per cent after data showed Britain’s economy contracted by less than feared in the second quarter.

Roche rose 1.6 per cent after the drugmaker received approval from the US Food and Drugs Administration for its Xofluza drug to treat influenza in children aged 5 years and older. REUTERS


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