European Shares Fall as Healthcare, Financials Weigh

European shares slipped on Tuesday, pulling back after robust gains in the last session, as falling healthcare and financial stocks weighed while investors focussed on key inflation data across the continent due later in the day. The pan-European STOXX 600 was down 0.3% as of 0810 GMT after climbing to a more than two-week high on Monday following a report that suggested U.S. President-elect Donald Trump may opt for a less aggressive tariff strategy. Trump later denied the report, adding to the uncertainty.



On the day, healthcare was amongst the top losers early on, falling 0.8% with index heavyweight Novo Nordisk (NYSE:NVO) down 2.1%, while AstraZeneca (NASDAQ:AZN) fell 1.5%. Insurance eased 1.2%, while banks dipped close to 1%. Focus will be on euro zone inflation reading due later in the session. French consumer prices, meanwhile, rose less than anticipated in December. Sodexo (EPA:EXHO) slid 6.1% after the French food caterer missed market expectations on first-quarter organic revenue. Next (LON:NXT) advanced 2.7% after the British clothing retailer lifted its annual profit outlook for the fourth time in six months.

European stocks edged lower on Monday after credit ratings agency Moody's unexpectedly downgraded France's rating, adding to pressure on the nation's borrowing costs and raising doubts over whether a new government can mend the deteriorating financial situation. There was some cheer on the data front as a survey showed the decline in eurozone business activity eased this month. HCOB's preliminary composite eurozone Purchasing Managers' Index, compiled by S&P Global, rose to 49.5 in December from November's 48.3.



Eurozone government bond yields held steady after European Central Bank president Christine Lagarde said the darkest days of high inflation are behind and the central bank will continue to lower its key interest rate. The pan European STOXX 600 slipped 0.2 percent to 515.27 after falling half a percent in the previous session to snap a three-week winning streak. The German DAX, France's CAC 40 and the U.K.'s FTSE 100 were down between 0.2 percent and 0.6 percent.

In corporate news, healthcare company Novo Nordisk A/S gained nearly 2 percent after an announcement that it plans to invest 8.5 billion Danish kroner to establish a completely new production facility in Odense, Denmark. Swiss biopharma Basilea Pharmaceutica surged 4 percent after it entered into an exclusive distribution and license agreement with Innoviva Specialty Therapeutics for the commercialization of Basilea's hospital anti-MRSA antibiotic Zevtera or ceftobiprole in the United States. Porsche Automobil Holding SE lost nearly 2 percent. The company withdrew its profit guidance for 2024, citing potential non-cash impairment charges related to its investment in Volkswagen AG and Porsche AG. Mass-media conglomerate Vivendi soared 33 percent in Paris as its newly spun-off entities Canal+, Havas and Louis Hachette Group started trading in London, Amsterdam and Paris respectively. Gambling outfit Entain that owns Ladbrokes plunged 5 percent in London after Australia's anti-money laundering regulator had opened civil penalty proceedings related to alleged breaches of the country's contraventions anti-money laundering and counter-terrorism law. Ricardo, a strategic, environmental, and engineering consulting company, gained about 1 percent after an announcement that its Australian unit has signed an agreement to acquire 85 percent of E3 Advisory for approximately A$101.4 million or 51.0 million pounds.

As we look ahead, investors should keep an eye on the outcome of key trial results across the healthcare sector, particularly where success in late-stage studies is uncertain but the sales potential is significant. Additionally, any impact on government-funded vaccines or pharma pricing from the new US administration could modestly help the sector's multiple. However, high valuations and any setbacks could have an outsized impact on share price performance, urging caution.