- Sharp gains in European markets after major setbacks
- Nearly all sectors of the economy show marked gains
- Novo Nordisk's weak performance weighs on the pharmaceutical industry
Overall market situation:
Wednesday's session on European stock markets brings an attempt to unwind the recent dynamic declines. Germany's DAX is currently gaining 1.51% on an intraday basis. At the same time, the French CAC40 is up 1.73%. The only sectors where we are seeing moderate downward pressure today are pharmaceutical companies and shipping. This is largely related to the publication of Novo Nordisk's quarterly results, which fell short of investors' expectations.
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Volatility seen in the broad European market today. Source: xStation
Germany's benchmark DE40 is trading nearly 1.25% higher during Wednesday's session. The index broke below the key support level set by the 200-day EMA (gold curve on the chart). At the moment, the index is consolidating within this zone, and today's session alone brings an attempt to go above this zone. If the market bulls fail to take dominance over the market and close the intraday session above this zone, a further supply reaction could take the index to the region of 17,350 points, where local minima are currently located after the dynamic declines of recent days and the abolition of the 38.2% Fibo of the upward channel initiated in October 2023. Source: xStation
News:
Novo Nordisk (NOVOB.DK) shares are losing nearly 2% in today's session following the release of disappointing quarterly results. Wegova's second-quarter sales came in at DKK 11.7 billion ($1.7 billion), compared to an average estimate of DKK 13.7 billion. Revenue from sales of the drug suffered due to higher-than-expected price concessions to U.S. pharmacy benefit managers. Although the CFO communicated that the worse results were the result of one-time events, the magnitude of the surprise raised investor concerns about rising pricing pressure due to competition from U.S. rival Eli Lilly (LLY.US)
Other key news:
- Novo reported that full-year operating profit would rise 20% to 28%, a slight decline from its earlier forecast.
- Novo also said it has withdrawn its application to U.S. and European regulators for approval of the heart disease drug Wegova. The company plans to resubmit the application early next year with additional data.
- Novo's largest drug, Ozempic, also failed to meet expectations. Sales were 28.9 billion kroner, less than the 29.7 billion kroner expected by analysts.
- Revenues for the year will rise 22% to 28% at constant exchange rates; Novo had previously forecast sales growth of 19% to 27% at constant exchange rates.
The company's shares lost as much as 8% today, but the scale of the decline has already been reduced to 2%. The stock today tested a key support point set by the 200-day exponential moving average (gold curve on the chart). Source: xStation
Commerzbank (CBK.DE) shares fell as much as 4%, hitting their lowest level since March, as the bank's results fell short of investors' expectations, and downward pressure was further reinforced by the announcement of an increase in reserves at the German banking group.
SECOND QUARTER RESULTS
- Net profit €538 million, estimates €550.5 million
- Revenue €2.67 billion, forecast €2.62 billion
- Operating profit 870 million euros, estimate 876 million euros
- Provision for credit losses €199.0 million, estimate €170.3 million
- Core Tier 1 capital ratio 14.8%, estimate 14.8%
- Efficiency ratio 59.9%, estimated 59.9%
ANNUAL FORECAST
- Still sees Common Equity Tier 1 ratio above 14%, 14.7% estimate
- Provision for loan losses still below €800 million, estimate €728.2 million
- Still expects net interest income of about €8.1 billion, estimate €8.13 billion
- Based on H1 results, the Bank has applied to the ECB and the German Finance Agency for another share buyback with a first tranche totaling €600 million. The Bank plans to apply for the second tranche based on Q3 results
Other news coming from individual companies in the DAX index. Source: Bloomberg Financial LP
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