Frankfurt, Germany — European shares closed flat on Monday as earlier gains driven by optimism surrounding China’s stimulus efforts to reinvigorate its economy faded, while Danish pharmaceutical company Novo Nordisk achieved record-high stock prices.
The pan-European STOXX 600 index (.STOXX) maintained its position at 457.96 points at the close, after briefly touching near four-week highs earlier in the day.
Key Highlights:
1. Miners Surge on China Stimulus Hopes: Mining stocks (.SXPP) ended the day 0.6% higher, having risen nearly 2% during intraday trading. This surge came as iron ore futures rallied on optimism about China, the world’s leading steel producer, implementing policies to support its struggling property sector.
2. China’s Economic Support Measures: China has intensified efforts to bolster its slowing economy. Major banks have initiated steps towards reducing lending rates, and sources have revealed that Beijing is planning additional measures, including easing restrictions on home purchases.
3. Mixed Performance in Other Sectors: Europe’s technology sector (.SX8P) saw a 0.5% gain, driven by Dutch semiconductor equipment maker ASML (ASML.AS), which rose by 0.8%. China-exposed industrials (.SXNP) also rose 0.1%, while automakers (.SXAP) posted a 0.3% gain. However, luxury giant LVMH (LVMH.PA) declined by 0.4%, initially impacting the STOXX 600.
4. Novo Nordisk Sets Records: Novo Nordisk (NOVOb.CO) achieved a 0.7% increase, hitting an all-time high during intraday trading. This surge followed the Danish pharmaceutical firm’s launch of its weight-loss injection Wegovy in Britain. Novo Nordisk, with a market capitalization of $424.7 billion, overtook LVMH (LVMH.PA) as Europe’s most valuable publicly listed company.
5. Bond Yields and Upcoming Economic Data: Rising European bond yields contributed to keeping gains in check. German inflation and Eurozone gross domestic product figures, expected later in the week, will serve as significant indicators of the European economy’s health, leading up to the European Central Bank’s policy meeting on September 14.
6. Expectations of Stable Interest Rates: European stocks closed out the last week of August with gains, partially recovering losses incurred earlier in the month. Recent economic data fueled speculations that major central banks were nearing the end of their interest rate hikes. Friday’s data, which showed an increase in the U.S. unemployment rate, solidified expectations that the Federal Reserve would maintain unchanged interest rates at its upcoming policy meeting.
Please note that U.S. markets remained closed on Monday in observance of Labor Day.
7. Telecom Italia Rises: Telecom Italia (TIM) (TLIT.MI) saw a notable 3.5% increase after Barclays upgraded the stock from “underweight” to “equal-weight.”
