Europe: Shares slip with miners, banks amongst top decliners
EUROPEAN equities slipped in a broad-based decline on Tuesday, as investors turned risk-off with government bond yields across Europe rising, though advancing heavyweight healthcare stocks helped limit some losses.
The pan-European Stoxx 600 ended 0.2 per cent lower, stalling after rising nearly 0.4 per cent in the previous session as government bond yields across the continent rose on Tuesday.
Basic resources led sectoral declines, falling 1.4 per cent, while banks lost 0.8 per cent, snapping a three-day winning streak.
Keeping a lid on losses, healthcare stocks extended gains to a second consecutive day, climbing 0.7 per cent, hovering at a near 17-week high hit in the previous session.
Healthcare stocks make up more than 15 per cent of the European benchmark index, according to LSEG data.
Stocks making the headlines on Tuesday included Grifols, which fell 25.9 per cent after hedge fund Gotham City Research questioned its accounting. The Spanish drugmaker denied any wrongdoing.
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On the data front, German industrial production unexpectedly fell in November from the previous month, marking the sixth consecutive monthly decline.
Germany’s DAX 40 ended 0.2 per cent lower, while the yield on the German 10-year government bond was last at 2.188 per cent.
A separate reading showed the euro zone unemployment rate unexpectedly fell to 6.4 per cent in November, against expectations of 6.5 per cent.
“We do not think a still-tight labour market will prevent wage growth from coming down sharply this year; in other words, a low unemployment rate should not deter ECB rate cuts,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.
However, a string of mixed economic data across the world has pushed markets to scale back their expectations for future policy rate cuts, with expectations of a pause in the European Central Bank’s upcoming meeting largely baked in.
Focus this week will also be on the beginning of the earnings season in the US and the inflation report due on Thursday, which could set the tone for equities globally.
Meanwhile, UBS raised its 2024 target for benchmark European Stoxx 600 to 450 points, from 410 expected earlier.
Among individual stocks, Hays slumped 7.1 per cent after the recruitment firm warned of a lower-than-expected half-year profit, citing a hiring slowdown.
Jyske Bank gained 3.8 per cent after Barclays initiated coverage on the Danish bank with an “overweight” rating.
Italy’s Pirelli advanced 4.3 per cent after executive vice-chairman Marco Tronchetti Provera increased his indirect stake in the tyre maker.
BASF fell 2.7 per cent after Bernstein downgraded Europe’s biggest chemical maker’s stock to “underperform” from “market-perform”. REUTERS
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