BENGALURU: European shares were subdued on Monday after a strong week driven by aggressive bets on interest rate cuts, with drugs-to-pesticides group Bayer sliding to a more than 14-year low and weighing on the healthcare sector and Germany’s benchmark index.
The pan-European STOXX 600 was little changed by 0945 GMT after jumping nearly 3% last week.
As investors started pricing in 100-basis-point rate cuts for 2024 with the first one seen as soon as April, European Central Bank officials shunned market optimism, flagging still-high inflation and a somewhat resilient economy.
The healthcare sector led sectoral declines with a 0.8% loss after Bayer lost 18.9%, on track for its worst day on record, after aborting a large late-stage trial testing a new anti-clotting drug. Germany’s DAX fell 0.1%.
Separate news that the company had been ordered to pay $1.56 billion in the latest US lawsuit over its commonly used Roundup weedkiller also hurt sentiment. Meanwhile, data from the region showed producer prices fell along expectations in October, continuing a downward trend after September’s record fall.
Further, Italian bank stocks gained after Moody’s upgraded the outlook for the country’s sovereign debt in an unexpected boost for Prime Minister Giorgia Meloni’s government. The FTSE MIB was down 0.2%, although futures on the benchmark index were up 0.6%. The risk premium investors ask to hold Italian and Portuguese sovereign debt also fell, reflecting some relief.