Europe: Stoxx 600 closes higher but gains limited by tech, defence

EUROPE’S Stoxx 600 closed higher on Wednesday boosted by consumer and healthcare stocks, while declines in tech and defence stocks limited gains, ahead of a crucial meeting of global central bankers.

The pan-European Stoxx 600 index closed 0.2 per cent up at 559.09, at its highest closing level in more than five months.

However, most major regional bourses fell, with Germany’s DAX down 0.6 per cent, but the UK’s FTSE 100 hit a record high and closed 1.1 per cent higher. Data showed UK inflation rose to 3.8 per cent in July, its highest since early 2024 and in line with the Bank of England’s expectations.

Among sectors, consumer-facing food and beverage stocks gained the most, up 2.3 per cent, led by Nestle’s 3.6 per cent rise. Personal goods and household companies followed, gaining 1.4 per cent.

Optimism of progress towards ending Russia’s war in Ukraine persisted, as the US and its allies prepared to work out what military support for Ukraine might involve as part of a deal, but caution also lingered as the details were not clear.

Shares of European defence-linked companies dropped 1.4 per cent, after suffering their worst day in more than a month in the previous session on expectations of a Ukraine peace deal.

“Even if the war ends, there’s a huge restocking cycle that needs to go on for countries to replenish their weapons, which will keep these companies in business for a long time,” said Michael Field, chief equity strategist at Morningstar.

“The market is slightly flawed in its thinking about the (defence) sector.”

Heavyweight tech stocks fell 0.5 per cent, tracking a tech sell-off in the US, over concerns over an AI stock bubble and uncertainty around the interest rate outlook.

This week, the focus will be on the Federal Reserve’s annual Jackson Hole symposium, where Chair Jerome Powell and other major central bank heads are set to speak.

“There’s always a big expectation and that kind of gets moderated down… I would caution anything massive coming out of this,” said Field.

The Stoxx 600 has gained about 10.2 per cent so far this year on hopes of higher spending in the bloc, a shift to European assets in the first half of 2025 and rising expectations of a US interest rate cut.

Rockwool fell 16.2 per cent, the most on the Stoxx 600, after the Danish mineral wool maker lowered its full year guidance. The stock logged its worst day in more than two-and-a-half years. Alcon slumped 9.4 per cent in its biggest one-day fall in more than five years, after cutting its 2025 net sales forecast on expected impact of US tariffs.

British medical equipment maker Convatec announced a US$300 million share buyback programme, sending its shares up 5.6 per cent to the top of the Stoxx index. REUTERS