Europe: Stoxx 600 ends higher on defence boost; Novo Nordisk jumps after Wegovy data

European shares finished marginally higher on Monday (Sep 1), supported by defence stocks, while Novo Nordisk gained after data showed its weight-loss drug Wegovy delivers stronger heart-protective benefits than Eli Lilly’s rival therapies.

The pan-European Stoxx 600 closed up 0.23 per cent at 551.43, with gains led by the aerospace and defence index, which surged 2.1 per cent to hover near a record high.

Defence giants, Rolls-Royce Holdings, Rheinmetall and Hensoldt advanced between 2.8 per cent and 4.5 per cent.

Gains followed a Financial Times report that European Commission President Ursula von der Leyen said that Europe was preparing “pretty precise plans” to send troops to Ukraine as part of post-conflict security guarantees.

“The possibility of additional support for Ukraine can only be beneficial as far as (European) stocks are concerned and investors are really buying into that,” said Fiona Cincotta, senior market analyst at City Index.

Britain’s BAE Systems was up 1.8 per cent, as Norway said that it had chosen Britain for the acquisition of new frigates, in a deal worth some £10 billion (S$17 billion).

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Danish drugmaker Novo Nordisk, the fourth-largest healthcare company on the Stoxx index, rose 1.8 per cent after the company said that Wegovy cut the risk of heart attack, stroke or death by 57 per cent versus Eli Lilly’s rival medicines Mounjaro and Zepbound in a real-world comparison.

The stock bolstered the healthcare index, rising 0.27 per cent. Denmark’s main stock index gained 1.1 per cent, also aided by Novo’s domestic peer Zealand Pharma that ended 3.5 per cent higher.

Overall gains were limited by a jump in long-dated euro zone bond yields on persistent worries about government debt levels around the world.

Germany’s 30-year yield rose as much as to a 14-year peak of 3.381 per cent before cooling to 3.36 per cent, up two basis points.

Utilities, often traded as a bond proxy, fell 0.9 per cent to lead sectoral losses on the Stoxx 600.

Meanwhile, US tariff policy remained a key focus after a US appeals court ruled on Friday that most of US President Donald Trump’s tariffs are illegal, but left them in place until mid-October to permit further appeals.

Trump has vowed to take the case to the Supreme Court and trade experts say the administration is preparing alternative plans to be able to proceed with its tariffs.

The European Union has struck a deal with the US, while the Swiss continue to negotiate, although broader trade uncertainty has subsided since April.

Goldman Sachs was the latest among major brokerages to raise its Stoxx 600 target for the next 12 months, lifting it to 580 from 570.

Orsted gained 3.5 per cent after Norway’s Equinor pledged to support its planned US$9.4 billion rights issue as the Danish offshore wind developer seeks to bolster its balance sheet as both companies navigate regulatory hurdles in the US offshore wind market.

On the data front, euro zone manufacturing activity expanded in August for the first time since mid-2022 due to a surge in domestic demand and output.

Investors geared up for this week’s US jobs report, which could sway expectations for the Federal Reserve’s next policy move at its meeting later this month.

Trading was light throughout the day due to a US holiday. REUTERS