European stocks climbed to the highest level since mid-June as gains in mining and healthcare stocks helped offset a slump in chip stocks after Taiwan Semiconductor Manufacturing Co. cut its outlook.
(Bloomberg) — European stocks climbed to the highest level since mid-June as gains in mining and healthcare stocks helped offset a slump in chip stocks after Taiwan Semiconductor Manufacturing Co. cut its outlook.
The Stoxx 600 Index gained 0.4% by the close in London, extending gains for a third-straight session. Healthcare stocks led gains, while the tech sector lagged amid a slew of earnings reports from companies.
Hikma Pharmaceuticals Plc surged on expectations that it may help fill a production gap after a Pfizer Inc. plant was struck by a tornado, potentially worsening the drug shortage in the US. Meanwhile, Anglo American Plc advanced as the precious metals miner’s production for the second quarter beat the average analyst estimate. Other miners, such as Glencore Plc and Rio Tinto Plc also rose.
ASML Holding NV led the selloff in European tech stocks after TSMC warning showed investors that the global electronics slump may persist for some time despite a boom in AI development. Tech behemoths in the US also slid, with Netflix Inc. poised for its biggest drop this year after projecting third-quarter revenue that fell short of Wall Street estimates, and Tesla Inc. sinking as the carmaker warned of more hits to its already-shrinking profitability.
“There is a risk of consolidation in the tech sector given this year’s performance and there’s probably a shortage of juice for stocks to go higher now,” Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux said in a phone interview.
Among other stocks, Electrolux AB declined the most on record after the Swedish home appliance maker said it plans to offload various non-core brands worth about $1 billion as losses continued to mount.
For the time being, European equities are trading sideways before central bank meetings next week increase volatility again, said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. Markets are digesting mixed earnings, Urbahn added. “The focus will be on the reporting season this week and the central banks next week,” he said.
The latest pledges from China to rebuild a shattered private sector fell flat with investors, who said more concrete steps would be needed to boost sentiment.
For more on equity markets:
- Looking to China for Next Leg Higher Carries Risks: Taking Stock
- US Stock Futures Fall as Tesla, Netflix Slide After Earnings
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–With assistance from Julien Ponthus and Michael Msika.
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