Europe’s STOXX 600 Rises 1% Amid Bank-Led Recovery; Novo Nordisk Declines

By Ankika Biswas and Pranav Kashyap

A robust recovery by banks on Wednesday propelled Europe’s main stock index to its largest single-day increase since November, despite a decline in Novo Nordisk, the continent’s most valuable company, which lowered its full-year profit forecast.

The pan-European index rose 1.5%, although it remained below the critical 500-point level following a recent downturn triggered by concerns over a potential U.S. recession.

Major indexes across Germany, France, the UK, and Spain experienced gains between 1.5% and 2%. Investor sentiment appeared to improve, evidenced by a drop in the "fear gauge" volatility index for a second consecutive day, following its peak at the beginning of the week.

The banking sector led the day’s gains, with the banking index surging 2.7%—its best performance in over a year—after a steep 11% decline over the prior five days. ABN Amro, in particular, saw a 5.6% increase after raising its full-year net interest income forecast.

Italy’s Economy Minister Giancarlo Giorgetti stated that the government does not plan to impose additional taxation on bank profits. Meanwhile, European Central Bank official Olli Rehn indicated that interest rate cuts could continue if confidence in easing inflation improves in the near term.

Recent data revealed a higher-than-expected increase in German industrial production for June, following optimistic industrial orders that provided a glimmer of hope for the country’s economy, which is facing a likely recession.

“There was actually some positive news for the beleaguered German industrial sector,” noted Elizabeth Martins, a senior economist at HSBC.

In notable stock movements, Novo Nordisk experienced its steepest one-day drop since August 2022, falling 6.7% amid concerns over its profit outlook and disappointing sales of the weight-loss drug Wegovy, raising fears about intense competition from Eli Lilly.

German sportswear brand Puma saw a significant decline of 10.8% after adjusting its full-year core profit predictions downward.

Conversely, Roche gained 3% following reports suggesting the Swiss pharmaceutical giant is contemplating the sale of Flatiron Health, a specialist in cancer data.

Just Eat Takeaway surged 13% after an upgrade from JPMorgan, which raised its rating from "neutral" to "overweight."

Continental’s shares increased by 6.8% after exceeding expectations in its results and providing an optimistic outlook for an even stronger second half of the year.

In contrast, shipping giant Maersk dropped 2.3% following its second-quarter results, with analysts pointing to heightened capital expenditure guidance as a negative factor, alongside anticipated slower global container shipping growth from the strong start seen this year.