European equities advanced on Tuesday, with the STOXX 600 gaining 0.35% to 656.48, leaving it just 0.6% below its all-time high set earlier in the month.
The healthcare sector led gains with a 1.2% rise, driven by Novo Nordisk’s 2.9% advance after JPMorgan raised its price target on expectations of sustained long-term sales growth for the Danish obesity drug maker. Zealand Pharma surged 5.6% in the same space. Industrials followed with a 1.1% increase, their strongest performance in three weeks, as Melrose Industries climbed 10.4% after providing a timeline to resume full production at GKN Aerospace’s Los Angeles plant. Production had been suspended in late May following an overheating tank that raised explosion concerns.
Defence and aerospace shares edged 0.9% higher, while luxury stocks weighed on the benchmark with a 1.2% decline. Kering, the owner of Gucci, fell 3.3% after the announcement. The tech sector rose 0.2% ahead of Nvidia’s earnings release on Wednesday, though lingering concerns about meeting elevated expectations capped gains. Software and data stocks ended lower following Alphabet’s unveiling of its Gemini Enterprise tool for legal firms, with Capgemini down 1.8% and Wolters Kluwer falling 3.1%.
Oil prices fell 3.5% as traders assessed that the latest U.S. sanctions on Iran posed little immediate threat to global crude supplies. The measures, announced by U.S. Treasury Secretary Scott Bessent, targeted Iran’s financial networks but stopped short of penalizing its trading partners. Tehran responded with threats of retaliation and expressed confidence that major partners would resist Washington’s pressure campaign.
In Germany, second-quarter GDP growth exceeded expectations and business morale reached a one-year high in August. Carsten Brzeski, global head of macro at ING, noted that while a sustained recovery remained premature, the combination of growth above potential in the first half and four consecutive months of improving sentiment was encouraging. He cautioned, however, that risks persist from elevated oil prices, potential gas price shocks during the upcoming heating season, and renewed trade tensions.
Federal Reserve Chair Kevin Warsh is expected to address rising bond yields and central bank independence at the Jackson Hole symposium this week, adding to market focus on monetary policy signals.
