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(Bloomberg) — European equities dropped as investors weighed conflicting messages about the path for interest rate cuts and French stocks resumed their decline.
The Stoxx Europe 600 Index fell 0.6% by Wednesday’s close after rising as much as 0.6% earlier. France’s CAC 40 Index slid 0.7%. Gains in European technology stocks were offset by losses in automotive as well as travel and leisure shares.
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Among individual stocks, Novo Nordisk A/S fell 2% after the Danish drugmaker halted its late-stage study of a cure for treating kidney disease, saying the trial failed to meet its primary goal. Deliveroo Plc shares gained following a report that US meal delivery group DoorDash Inc. held unsuccessful takeover talks with the UK company.
Atos SE, the troubled French IT firm, saw its shares decline after stating that Onepoint, its largest shareholder, has withdrawn from talks to bail it out and that billionaire Daniel Kretinsky’s EPEI expressed an interest in restarting discussions. Alfen NA’s stock plunged after the Dutch energy infrastructure firm cut its revenue forecast.
Bond yields climbed Wednesday as traders assessed commentary from central bankers on both sides of the Atlantic. Federal Reserve Governor Michelle Bowman said it’s not yet appropriate to cut rates and that inflation will remain elevated for some time. European Central Bank Governing Council member Olli Rehn said investor expectations for two more rate reductions by the ECB in 2024 are reasonable.
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European equities trading has been volatile in June, with political turmoil in France offsetting optimism about resilient economic growth and easing borrowing costs. Strategists don’t see any upside left for regional stocks as they adopt a wait-and-see approach ahead of the country’s elections, which could yield big changes for economic policy.
Still, a brighter outlook for corporate results is helping sustain more positive views on what lies ahead for markets. “We remain bullish for the second half of the year. Our leading indicators for company earnings are pointing to a continued recovery,” Liberum strategist Susana Cruz said. “The prospect of interest rate cuts supports our view and the margin outlook.”
For more on equity markets:
- Fragile Sentiment Sets Stage for Broader Declines: Taking Stock
- M&A Watch Europe: Sanofi, Deliveroo, Doordash, Phoenix Group
- Europe IPOs Cling to Gains as Revival Starts to Fade: ECM Watch
- US Stock Futures Unchanged; Worthington Enterprises Falls
- Can They Fix It?: The London Rush
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—With assistance from Michael Msika and Sagarika Jaisinghani.
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