European stocks edged up on Tuesday as investor focus started to turn to company earnings from economic data and monetary policy. Novartis AG climbed after raising its profit outlook and announcing plans for a share buyback of up to $15 billion.
The Stoxx Europe 600 index was up 0.2% as of 10:12 am in London. Healthcare, media and basic resources stocks led gains, while telecoms declined. Tele2 dropped after setting higher guidance on capital expenditure.
Ocado Group Plc was the best performer on the Stoxx 600, rising as much as 16% as the UK company said its online grocery joint-venture with Marks & Spencer Group Plc should return to profit this year.
Scandinavian lender Swedbank AB was higher, too, after delivering better-than-expected income from lending activities.
After gaining in the first half of 2023, Europe’s benchmark index has edged lower in July as investors consider the outlook for economic growth against expectations that central banks will keep interest rates higher for longer.
Sentiment was boosted last week as US inflation cooled more than expected. However, weaker-than-expected Chinese economic growth data hit European shares on Monday, particularly in areas exposed to the region, like luxury and mining. Options markets point to some trader nervousness over the economic outlook.
Karim Moussalem, a hedge fund manager at Selwood Asset Management, said in written comments that he suspects there could be a “heavy equity correction” later this year.
“My fear is that, just as the Street had a defensive position into a strong economy in the first half, it will end up with a cyclical position into a slowing economy in the second half, with no help from the Fed with early cuts,” he said.
For more on equity markets:
- Market Risks From Currency Moves Are Building Up: Taking Stock
- M&A Watch Europe: Novartis, GAM, Ordina, Sopra Steria, Steico
- Turkish Startup’s Tumble Shows Perils of SPACs: ECM Watch
- US Stock Futures Little Changed; Masimo, Acumen Pharma Fall
- Darktrace Sees Itself Cleared After EY Review: The London Rush
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--With assistance from Michael Msika.
