Europe: French shares lag European peers on Sanofi’s dour forecast

EUROPEAN shares fell to near seven-month lows on Friday (Oct 27) and clocked a second week of losses, with France’s blue-chip index leading the way down after Sanofi scrapped its 2025 profit forecast.

The pan-European Stoxx 600 closed 0.8 per cent lower, with healthcare the worst performing sector as it fell 2.9 per cent and also hit a seven-month low.

Sanofi sank 18.9 per cent to the bottom of the Stoxx 600, wiping nearly US$21 billion off the market value of the French drugmaker, as it abandoned a target for a 32 per cent operating profit margin for 2025 to focus on “long-term profitability”.

The move pulled France’s CAC 40 index 1.4 per cent lower.

UK lender NatWest fell 11.6 per cent on a profit outlook downgrade as Britain’s Financial Conduct Authority probes its handling of a decision to close former Brexit Party leader Nigel Farage’s accounts.

“From a reputational standpoint this is hugely damaging,” said Michael Hewson, chief market analyst at CMC Markets UK.

“Even accounting for the increased competition for customer deposits the revelations of unprofessionalism this week about some of its staff could prompt some customers to take their business elsewhere.”

Adding to the pressure on the Stoxx 600 was a 13.6 per cent drop in Electrolux after the Swedish home appliances maker missed quarterly core profit estimates, while spirits maker Remy Cointreau slumped 11.3 per cent on an annual forecast cut.

Media stocks were also big decliners, with Universal Music Group down 7.2 per cent after missing third-quarter profit margin estimates.

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Europe: Shares pare losses as ECB holds rates steady, earnings gloom weighs

The European Central Bank’s decision to pause its interest rate hike cycle helped the Stoxx index pare losses on Thursday, but there was no indication of rate cuts to come.

“All the talk at the start of the year about pauses and pivots in policy hasn’t happened yet,” said Russ Mould, investment director at AJ Bell, who said there were clear concerns about an impending recession.

“It will certainly be a test of sentiment as we go into the new financial year.”

The raft of gloomy earnings and downbeat economic data weighing on sentiment helped push the benchmark Stoxx to a 1 per cent loss for the week.

There were some bright spots on Friday – among gainers, Ubisoft jumped 4.8 per cent as the video game maker’s second-quarter bookings surpassed estimates, and Signify rose 5.1 per cent on upbeat quarterly core earnings. Miners also rose, adding 0.8 per cent as they tracked higher copper prices. REUTERS