Europe: shares slip on disappointing updates from banks, drugmakers
EUROPEAN shares slipped on Thursday (Feb 1), pulled down by downbeat updates from banks across the continent as well as drugmakers Roche and Sanofi, but Volvo Cars and Ferrari raced higher.
The pan-European Stoxx 600 index closed 0.5 per cent lower.
Banks were the biggest drag, down 2.0 per cent, led by a 9.2 per cent drop in BNP Paribas after the French lender reported a surprise drop in fourth-quarter income and pushed back a key profitability target.
French peers including SocGen and Credit Agricole also fell 4.0 per cent and 2.8 per cent, respectively.
Adding to the sector’s woes, shares of Dutch bank ING Groep dropped 6.4 per cent after the bank forecast lower total income for 2024.
Swiss drugmaker Roche tumbled 5.5 per cent as the market expressed disappointed with the company’s more modest than expected 2024 outlook, while Sanofi fell 4.1 per cent after missing fourth-quarter profit estimates.
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Dassault Systemes slumped 10.4 per cent after the French software maker projected revenue growth of 8 to 10 per cent this year at constant currencies, below analyst expectations, while Swedish medical equipment maker Getinge shed 11.9 per cent after missing quarterly earnings estimates.
On the data front, eurozone inflation eased as expected last month, data showed, but underlying price pressures fell less than forecast, likely boosting the European Central Bank’s argument that rate cuts should not be rushed.
“The numbers that we got today, even though they were slightly higher than expected, they are still highlighting a good downward trend,” said Patrick Farrell, chief investment officer at Charles Stanley & Co in London.
“But from a central bank perspective, the risks are still to the upside on inflation.”
Meanwhile, the Bank of England kept interest rates at a nearly 16-year high, but opened up the possibility of rate cuts, while Sweden’s central bank also kept its key interest rate unchanged at 4 per cent.
These decisions came on the heels of the US Federal Reserve’s verdict on Wednesday, when market expectations of an early interest rate cut were dampened as the central bank left rates unchanged but was less dovish than anticipated.
On the brighter side, heavyweight energy stocks advanced 1 per cent as Shell gained 2.4 per cent after beating quarterly earnings forecasts.
Automobiles rose 1.2 per cent, buoyed by a 26.4 per cent surge in Volvo Cars after the Swedish automaker said it would stop funding Polestar Automotive Holding.
Ferrari jumped 9.2 per cent after the luxury sports car maker reassured investors that its revenues and core earnings would keep growing this year.
Among other movers, French caterer Sodexo’s newly spun-off voucher unit Pluxee rose as much as 15 per cent in its market debut in Paris. REUTERS
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