European shares slipped on Friday (Sep 20) after a rally in the previous session spurred by the US Federal Reserve’s outsized interest rate cut, while drugmaker Novo Nordisk slid on disappointing obesity pill data.
The pan-European Stoxx 600 index closed 1.4 per cent lower, though it recorded a second straight week of gains.
All major European stock markets had steep losses, except Spain, which closed 0.2 per cent lower.
Novo Nordisk shed 5.4 per cent after results from a Phase 2a trial of the Danish drugmaker’s experimental obesity pill monlunabant came in below market expectations.
The broader health care sub-sector eased 1.9 per cent.
Autos led declines among the major Stoxx sectors, down 3.6 per cent, hurt by a 6.8 per cent slide in Mercedes-Benz which cut its full-year profit margin target for the second time in less than two months.
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Other industry rivals such as Volkswagen and France’s Forvia dropped 3.4 per cent and 8 per cent, respectively.
Tech eased 2.7 per cent as shares of Dutch computer chip equipment maker ASML lost 4.2 per cent after Morgan Stanley downgraded its rating on the stock to “equal-weight”.
Global equities had rallied sharply on Thursday after the Fed on Wednesday kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction.
“The market is expecting further reductions of a similar amount before the end of the year, and in the absence of an economic downturn, the scene is set for a positive end to the year,” said Richard Hunter, head of markets at interactive investor.
On the data front, British retail sales rose by a stronger-than-expected 1 per cent in August and growth in July was revised up, while eurozone consumer confidence rose by 0.5 point in September from the August number.
German producer prices fell less than expected in August, decreasing by 0.8 per cent on the year versus expectations of a 1 per cent decline.
Among other headline stocks, Germany’s DHL dipped 4.4 per cent following US rival FedEx’s dismal first-quarter results.
Burberry fell 3.5 per cent as Jefferies cut its rating on the British fashion company to “underperform” from “hold”. REUTERS
