Europe: Stocks end slightly higher as defence firms hit record high

EUROPEAN stocks edged higher on Monday as investors awaited key inflation figures from across the globe this week to gauge the outlook for interest rates, while the defence sector rose to record highs amid rising geopolitical uncertainty.

The pan-European Stoxx 600 closed up 0.1 per cent ahead of inflation readings from Germany, China and the US later this week, all likely to drive expectations on how long interest rates could remain high.

The basic resources index was down 1.0 per cent as shares of Aurubis AG fell 9.5 per cent despite Europe’s largest copper producer reiterating its forecast for a strong core profit in its current financial year.

“We’ve seen a little bit of negative momentum from these earnings because investors are punishing the fact that these results are actually even more dire than expected, considering that expectations were already pretty low,” said Daniela Hathorn, senior market analyst at Capital.com.

Stemming losses, the healthcare sector gained 0.6 per cent, lifted by 3.1 per cent gains in Bavarian Nordic after the Danish biotech company reported positive late stage topline results for its Chikungunya virus vaccine.

Europe’s aerospace and defence index hit a record high, rising 1.0 per cent, with Italy’s Leonardo and London-listed Melrose up 3.1 per cent and 2.6 per cent respectively.

“We’re still talking about the Chinese and Ukrainian conflict. So geopolitical risk is increasing and that’s good for that part of the market,” said Anthi Tsouvali, multi-asset strategist at State Street Global Markets.

Major European bourses were mixed, with London’s commodity-heavy FTSE 100 down 0.1 per cent, while France’s blue-chip CAC 40 index rose 0.1 per cent.

Pressuring Germany’s DAX, Siemens Energy dropped 6.1 per cent, having shuttled between gains and losses throughout the day.

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The German energy group said problems recently unveiled at its wind turbine unit would cost it 2.2 billion euros (S$3.22 billion), well short of worst-case estimates but still casting doubt over the future of the business.

The benchmark Stoxx 600 posted its first weekly decline in four on Friday as a mixed US jobs data, slowing business activity across the euro zone and a surprise US credit rating downgrade all dented the mood.

Meanwhile, a Sentix survey showed investor morale in the euro zone unexpectedly rose in August, ending three consecutive months of decline as inflation lost some of its explosive power, but there were no signs of a lasting turnaround in sentiment.

Scout24 SE jumped 5.4 per cent after the online property platform raised its full-year guidance, while PostNL climbed 9.5 per cent after the Dutch postal firm lifted its 2023 operating profit guidance. REUTERS