Key Moments
- The STOXX 600 fell 0.6% to 646.1 points by 0814 GMT, with major European benchmarks also in negative territory.
- Novartis shares sank 10.2% after a second consecutive late-stage drug trial disappointment.
- Energy stocks gained 0.6% as Brent crude traded around $98.5 per barrel, stoking renewed inflation concerns.
Broad Market Moves
European equity markets slipped on Tuesday as rising oil prices intensified inflation concerns and fears that conflict in the Middle East could disrupt energy supplies. A sharp selloff in Novartis shares added further pressure on regional indices after the company reported another significant setback in its drug pipeline.
The pan-European STOXX 600 declined 0.6% to 646.1 points by 0814 GMT. Germany’s DAX also dropped 0.6%, London’s FTSE fell 0.4%, and France’s CAC 40 lost 0.5%. The declines followed a relatively muted trading session on Monday, when a U.S. public holiday dampened activity.
| Index | Move | Level / Detail |
|---|---|---|
| STOXX 600 | -0.6% | 646.1 points by 0814 GMT |
| DAX (Germany) | -0.6% | N/A |
| FTSE (London) | -0.4% | N/A |
| CAC 40 (France) | -0.5% | N/A |
Novartis Hit by Back-to-Back Trial Disappointments
Novartis emerged as the worst performer on the STOXX 600, with its shares plunging 10.2%. The Swiss pharmaceutical group announced that a late-stage trial of its del-desiran treatment for myotonic dystrophy did not achieve its primary endpoint.
The setback came immediately after another highly watched disappointment disclosed on Monday, when Novartis reported that its experimental cholesterol therapy pelacarsen failed in a late-stage study.
“It’s creating a level of disappointment as far as the share is concerned… but let’s not forget that they have had a solid year to date… before this latest pullback yesterday and today. We’ve had solid gains,” said Fiona Cincotta, senior market analyst at Stone-X.
Sector Performance: Banks Struggle, Energy Advances
Bank stocks retreated 1.3%, weighing further on the broader market. According to Cincotta, the weakness in financials is closely tied to the deteriorating growth outlook in the euro area and the implications of higher energy costs.
“This is to do with the sort of the broad outlook for the eurozone economy and impact of higher oil prices… technically, are we looking towards a more recessionary outlook for the eurozone, which… banks tend to be the first place where we see that reflected,” she said.
In contrast, energy equities rose 0.6% as Brent crude futures traded around $98.5 per barrel. Prices were supported after Iran threatened to retaliate against any new attacks by targeting energy infrastructure across the Gulf, including U.S. oil and gas interests.
Rates Outlook and Inflation Concerns
The latest upswing in crude prices has revived worries over inflation, contributing to a global bond selloff last week and bolstering expectations that central banks may need to maintain restrictive policies for a prolonged period.
Market participants broadly anticipate that the European Central Bank will raise interest rates by 25 basis points on Thursday. Investors are also focused on upcoming U.S. inflation figures later this week, which follow a stronger-than-expected U.S. labor market report that strengthened expectations of another Federal Reserve rate increase this month.
Notable Stock Movers
Among individual names, Sandoz gained 4.5% after the Swiss pharmaceutical company stated that it aims to more than double net sales between 2025 and 2035.
In Italy, Poste Italiane increased its takeover proposal for Telecom Italia as the state-controlled group moves to secure control of the former national telecom monopoly. Shares of Poste Italiane were unchanged, while Telecom Italia advanced 2.5%.
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