European stocks gained as investors were unmoved by President Donald Trump’s plans to slap tariffs on patented drugs.
The Stoxx Europe 600 Index rose 0.4% as of 9.27am in London. The healthcare sector erased earlier losses to gain 0.1% after Trump said he plans a 100% duty on patented drugs effective Oct 1, unless the producer is building a manufacturing plant in the US. Novo Nordisk A/S fell 1.3% and Zealand Pharma A/S retreated 2%.
“Given the lack of detail, the potential that only a limited number of drugs may actually be affected and the risk that wide-ranging prices rises could backfire politically, we would refrain from cutting pharma exposure in response to the announcement,” said Wolf von Rotberg, equity strategist at Bank J. Safra Sarasin.
In other individual stocks, STMicroelectronics NV was down 1.7% after a Wall Street Journal report that the Trump administration weighs plans to reduce US reliance on chips made overseas.
European equities have been drifting in a narrow range as investors weighed the outlook for US interest-rate cuts. The focus later today will turn to the US Federal Reserve’s (US Fed) preferred inflation gauge, the PCE index, for clues on the state of the US economy.
“It could be a good entry point to add rather than short European stocks,” said Sophie Huynh, portfolio manager and strategist at BNP Paribas Asset Management. “Pharma is a big sector, but it is very country specific. It will trigger nervousness, but investors will need to look at the bigger picture.”
