(Bloomberg) — European stocks were muted, with advances in cyclical sectors such as autos and chemicals offsetting declines in technology shares. Novo Nordisk A/S plunged 17% after issuing a shock sales forecast.
The Stoxx Europe 600 Index was little changed at the close after earlier rising as much as 0.7%. Chemical stocks had their best day in almost four years as optimism for softer emission-reduction rules in the region added to a broader rotation toward companies geared to improving growth prospects. Defensive sectors including telecoms and consumer staples also advanced.
By contrast, tech stocks extended declines a day after software shares fell on fears over AI disruption. Cellnex Telecom SA gave its sector a boost, gaining after announcing a new senior management structure late Tuesday. Miners reversed gains and closed in the red as the metal bounce faded late in the session.
In individual stocks, GSK gained 6.9% as it reported better-than-expected profit in the fourth quarter, buoyed by its HIV drugs and an asthma medicine that’s now also approved for lung disease. Novo’s plunge was the biggest since July and wiped out more than $40 billion in market capitalization, weighing on the healthcare sector.
Banco Santander SA retreated 3.5% after the Spanish lender announced the acquisition of Webster Financial in a $12 billion deal. Some analysts are concerned that the bank may not be making best use of its capital, while others flag integration risks and expansion in the US.
Europe’s benchmark has scaled record highs amid optimism around resilient economic growth. Still, the earnings season has been mixed so far, raising worries that the rally could be running too hot. The Stoxx 600 is nearing overbought territory as measured by the relative strength index.
“This earnings season is not really what many investors had expected because they thought that the worst of the currency and tariff-related effects last year were largely done and a lot of those stocks were oversold,” said UBS Group AG strategist Gerry Fowler. “A lot of investors are feeling a bit of pain.”
Euro-area inflation sank to lowest in more than a year, below the European Central Bank’s 2% target as officials weigh their next steps on interest rates. Core inflation, excluding volatile food and energy costs, eased to 2.2%, while services gauge slowed to 3.2%, Eurostat said Wednesday.
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–With assistance from Sagarika Jaisinghani, Michael Msika and Rose Henderson.
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