European stock markets exhibited a lackluster performance on Tuesday, with losses in the technology sector offsetting gains in healthcare companies. Meanwhile, Germany’s prominent software corporation, SAP, faced a decline following disappointing revenue forecasts from its U.S. counterpart, Oracle.
The pan-European STOXX 600 index remained relatively unchanged as of 0812 GMT, while a dip in tech stocks weighed down Germany’s DAX, causing it to trade 0.4% lower than its regional counterparts.
Shares of SAP experienced a 1.9% decline, positioning it at the bottom of Germany’s blue-chip index, DAX. This drop was a consequence of Oracle’s projection of current-quarter revenue falling short of Wall Street expectations, primarily due to challenging economic conditions affecting cloud spending by businesses.
On the brighter side, healthcare stocks demonstrated resilience, surging by 0.6%. Notably, pharmaceutical giants such as Novartis, Novo Nordisk, and Roche recorded gains ranging from 0.5% to 1.8%.
In the United Kingdom, the export-oriented FTSE 100 index rose by 0.4%, partly supported by a weaker pound. Data indicated a weakened labor market in July, although wage growth remained robust. This mixed data adds uncertainty ahead of the Bank of England’s forthcoming interest rate decision.
Nick Rees, an FX market analyst at Monex Europe, commented, “The strength of wage growth remains too strong for policymakers to declare victory, even if continued softening elsewhere in the release suggests that this is unlikely to persist for much longer. Unless a significant surprise materializes in next week’s CPI release, a 25 basis point hike on Sept. 21 that takes Bank Rate to 5.5% is likely to be the last of this tightening cycle.”
In Spain, the National Statistics Institute (INE) reported a 2.6% year-on-year increase in consumer prices through August, primarily driven by rising fuel costs.
Investors are now eagerly awaiting U.S. inflation figures scheduled for release on Wednesday. These data points could offer fresh insights into the trajectory of interest rates, following the Federal Reserve’s recent hints at potential further policy tightening.
Among other notable movers in the market, Airbus witnessed a 1.1% decline after engine supplier Pratt & Whitney issued a warning regarding a rare manufacturing flaw that could potentially ground hundreds of Airbus aircraft in the coming years.
In contrast, Associated British Foods saw a 1.4% rise in its shares. The owner of Primark raised its full-year profit outlook for the second time in four months, buoyed by strong trading performance in its fast-fashion clothing and food segments.
On the merger front, Ireland-based Smurfit Kappa experienced a 10.6% dip following its agreement to merge with WestRock. This union is set to create one of the world’s largest paper and packaging producers, with an estimated worth of nearly $20 billion.
