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European stocks edge up as Novo Nordisk offsets luxury sector jitters
Published by Uma Rajagopal
Posted on October 11, 2023
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European stocks edge up as Novo Nordisk offsets luxury sector jitters
By Sruthi Shankar
(Reuters) -European stocks inched higher on Wednesday as Novo Nordisk shares jumped after a positive update on its diabetes drug Ozempic, though underwhelming results from French luxury giant LVMH capped gains.
The pan-European STOXX 600 index edged up 0.1% to hover near a one-week high. Most regional markets were mixed, with France’s blue-chip index down 0.6% and lagging the most.
LVMH dropped 6.6% to touch a 10-month low after the luxury goods bellwether reported a 9% rise in third-quarter revenue, marking slower growth as a strong wave of post-pandemic spending eases.
Shares of other French luxury majors such as Hermes and Kering fell more than 2% each, while a gauge of top 10 European luxury stocks tumbled 3.1%, on track for its biggest percentage drop since September 6.
“Expectations were very high. There will be significant downside if you can’t meet expectations when people are as nervous as they are,” said Lewis Grant, senior portfolio manager for global equities at Federated Hermes.
The STOXX 600 rallied almost 2% on Tuesday to record its biggest one-day gain this year, boosted by a retreat in U.S. Treasury yields following dovish comments from Federal Reserve policymakers.
Focus this week will be on U.S. inflation data and speeches from Fed officials for clues on whether the Fed will raise interest rates in November.
Investors also remained cautious as the ongoing conflict in the Middle East raised the prospect of further spike in oil prices.
Israeli warplanes bombed Gaza repeatedly overnight ahead of a possible ground offensive to root out Hamas, intensifying the fighting that started over the weekend.
Meanwhile, the Baltic Sea pipeline and a telecommunications cable connecting Finland and Estonia were damaged on Sunday, with the Finnish government calling it a deliberate act.
“We’re in the shadow of another major conflict. All of our measures suggest that with oil elevated, gas prices going higher with the pipeline issue in Finland, inflation is going to stay around which tends to lead to more risk aversion.”
Helping keep the markets afloat, Novo Nordisk jumped 3.1% after the Danish drugmaker said it would stop a trial studying Ozempic to treat kidney failure in diabetes patients ahead of schedule because it was clear from an interim analysis that the treatment would succeed.
Shares of German kidney dialysis provider Fresenius Medical Care sank 19.3% on the news.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich and Varun H K)