European shares hit record close with healthcare stocks leading broader rally

[BENGALURU] European shares notched up a record high close on Thursday (Jun 25), with healthcare stocks leading the way while a resurgent artificial intelligence rally triggered by strong forecasts from Micron and Qualcomm lent support early in the session.

The pan-European Stoxx 600 index ended 0.8 per cent higher at a record close of 640.21, after touching an intraday record of 642.09 in the session. It was the biggest one-day jump in nearly two weeks.

Healthcare stocks were among the biggest boosts to the index, up 1.5 per cent. Bayer jumped 18.7 per cent to top the Stoxx 600 after a court victory in which the US Supreme Court reined in thousands of lawsuits accusing the pharma firm of failing to warn users that the active ingredient in its Roundup weedkiller causes cancer.

Meanwhile, a rally in tech stocks helped push the Stoxx 600 to an intraday high, but fizzled out later in the session. The sector closed up 0.8 per cent after gaining as much as 2.5 per cent in the session.

Strong forecasts from Micron and Qualcomm calmed investor concerns that a rally in global AI-linked stocks had run too far.

Chipmakers Infineon and STMicroelectronics gained 3.1 per cent and 5.1 per cent, respectively, while semiconductor equipment supplier ASML climbed 2.6 per cent

AI-equipment maker Siemens Energy rose 2.3 per cent.

“While Europe is sort of lacking tech leaders in a way, some of the companies are still in a place where they can get material benefits from it,” said Martin Frandsen, a portfolio manager at Principal Asset Management.

Elsewhere, US inflation broke above 4 per cent in May, for the first time in three years, as the US-Israeli conflict with Iran drove up energy prices, keeping an interest rate increase from the US Federal Reserve this year on the table.

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“Today’s data is a reminder that inflation remains well above target and growth remains solid. This will keep the Fed on hold for quite some time, until conditions allow for a cut,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

Oil prices reversed declines to gain after a report said Teheran planned to make billions in fees from reopening the Strait of Hormuz.

The uncertainty over the opening of the crucial waterway prompted traders to continue pricing in an interest rate hike by the Federal Reserve and the European Central Bank by year-end, according to LSEG-compiled data.

Among other stocks, 3i Group jumped 11.4 per cent after its portfolio company Action’s like-for-like sales growth.

EasyJet shares rose 6.4 per cent after the British budget carrier rejected a fourth takeover offer from US-based investment firm Castlelake.

German automaker Volkswagen added 1.3 per cent after agreeing to sell its diesel engine unit Everllence to Bain Capital in a deal generating proceeds of about 7.4 billion euros (S$11 billion). REUTERS