European shares rise slightly as healthcare and telecom stocks increase.

European shares rise slightly as healthcare and telecom stocks increase.

European Shares Inch Higher on Advances in Defensive Sectors

European Shares

European shares opened on a positive note in early trading on Monday, with advances in defensive sectors such as healthcare and telecoms leading the way. While concerns over China’s property sector weighed on investor sentiment, gains in these sectors helped keep the overall market in the green.

The pan-European STOXX 600 index saw a marginal increase of 0.1% after experiencing a decline of over 1% in the previous session. The healthcare sector showed a gain of 0.2%, largely driven by a remarkable 5.4% surge in Philips stocks. This surge was attributable to Dutch investment firm Exor NV acquiring a 15% stake in the company. However, Exor NV saw a slight dip of 0.4% as a consequence.

The telecoms index also experienced a boost, rising by 0.6%, propelled by a 1.5% gain in Deutsche Telekom stocks. Despite these positive indicators, the overall mood remained largely risk-off. The European basic resources sector witnessed a decline of 0.3%, while oil and gas stocks slipped by 0.5% due to falling prices of crude and base metals. These declines were attributed to concerns over China’s property sector and a stronger dollar.

Adding to the concerns, Country Garden, China’s top private property developer, decided to suspend trading in its 11 onshore bonds, further fueling apprehensions regarding the state of the property market. LVMH, a luxury giant with significant exposure to China, saw a 0.1% drop in its stocks.

“The problem we’ve got is China has been increasingly weighing on market sentiment for a little while now,” explained Stuart Cole, chief macro analyst at Equiti Capital. “We had this news about Chinese property… that has prompted fears that we could get some kind of slump or potential crash in China.”

The pan-European STOXX 600, which reached over one-year highs last month, is now experiencing pressure due to concerns over China’s economic growth and fluctuations in bond yields. Euro zone bond yields rose slightly, with Germany’s 10-year government bond reaching a one-month high.

Commodity-heavy European bourses, such as the UK’s FTSE 100 and Norway’s Oslo SE All-Share Index, lagged behind, experiencing a decline of 0.1%. Geopolitical issues regarding a Russian warship firing warning shots on a cargo ship in the Black Sea over the weekend added to investors’ concerns.

This week, a range of economic data is expected to be released, including the flash estimate of euro-zone second-quarter GDP data, fresh euro-zone inflation data, and British consumer prices data. Wall Street futures remained largely unchanged after Friday’s losses following hotter-than-expected U.S. economic data.

In addition to the positive sentiment in defensive sectors, Siemens AG saw a gain of 0.8% after Berenberg upgraded the German engineering and technology group from “hold” to “buy.”

Overall, while concerns over China’s property market and geopolitical issues continue to impact European shares, the advances in healthcare and telecoms sectors provided some respite. Investors are keeping a close eye on economic data releases and global events in the coming days.