European equities remained largely flat on Tuesday, continuing a subdued start to the week, as persistent oil and gas price pressures and lingering inflation concerns kept investors on the sidelines ahead of key central bank decisions.
The EuroStoxx 50 traded 0.07% lower at 6,399.55 points by midday. Britain’s FTSE 100 was little changed. The Swiss SMI, however, fell 1.18% to 14,110.76 points, weighed heavily by losses in Novartis stock.
Investors were waiting for important economic data and interest-rate decisions later in the week, said Jürgen Molnar, a capital-markets expert at Robomarkets. Oil prices remained “the thermometer of the stock markets,” he added. Brent crude approached the $100-a-barrel mark in morning trading, and traders were awaiting details of a maritime shipping agreement between Iran and Oman concerning the Strait of Hormus, as well as the U.S. response.
The ongoing Middle East conflict continued to fuel inflation anxieties and add uncertainty. Higher interest rates are likely to remain priced in for longer, Molnar noted.
U.S. inflation data, due this week, are expected to signal the Federal Reserve’s room for monetary policy action. Markets increasingly anticipate a rate hike from the Fed next week. But attention is focused first this week on the European Central Bank, which will announce its benchmark rate decision on Thursday.
On the corporate side, Novartis shares fell more than 9%, making them the worst performer in the SMI. The decline followed a second failed clinical trial for a candidate treatment for myotonic dystrophy type 1, a muscle disease. The drug was considered the centerpiece of Novartis’s $12 billion acquisition of U.S. firm Avidity Biosciences earlier this year. Analysts began questioning the pharmaceutical giant’s long-term growth targets in early reactions to the trial setback.
Sandoz, the generics specialist, was among the few standouts. Growth ambitions that partly exceeded analyst expectations lifted its shares about 4% at the open, though gains narrowed to a slight positive by late morning.
