European Shares Gain On Boost From Novartis, Telecom Stocks Drag

Frankfurt
European shares edged higher after a muted start on Tuesday, with Swiss stocks outpacing regional peers following a forecast upgrade by drugmaker Novartis, though a decline in telecom stocks capped the gains. The pan-European STOXX 600 rose 0.2% by 0819 GMT, following declines on Monday when an underwhelming results and weak economic data from China pummelled Europe’s luxury sector.
Novartis climbed 3.6% on Tuesday after the drugmaker raised its full-year earnings guidance and mapped out the planned spin-off of its generic medicines division Sandoz for early in the fourth quarter. The move pushed the Swiss Market index, which had led regional declines in Europe on Monday, up 0.6%.
Europe’s healthcare sector, up 0.4%, also got a boost from 3.9% gains in shares of Swedish Orphan Biovitrum (SOBI) after the drugmaker’s second-quarter earnings beat estimates. Weighing on the broader STOXX 600 were telecom firms, down 1.7%, with Tele2 AB dropping 10.7% to a five-year low following mixed second-quarter results. Declines in the luxury sector amid mounting worries about China’s faltering economic growth have pressured the benchmark index after stellar gains in the previous week driven by hopes that the U.S. Federal Reserve’s rate hiking cycle was close to an end.
Investors are now waiting for June data on U.S. retail sales and industrial production for cues on future interest rate hikes. With the second quarter corporate earnings underway, investors are assessing the guidance of companies to get a grip on the impact of macro challenges, analysts say.