European shares climb to two-week high on solid earnings and healthcare rally

what happened

European stocks rose to their highest level in more than two weeks on Thursday, supported by solid corporate results and a jump in healthcare shares, which investors have turned to as enthusiasm for AI-linked trades cools. The pan-European STOXX 600 gained 0.38% to 640.16 points. Ericsson climbed 6.8% after the Swedish telecom equipment maker reported third-quarter results that beat expectations.

Technology shares dropped 1.5%, weighed down by a 13% slide at German chip-systems maker Aixtron. Infineon, Soitec and ASML also fell. The selling followed hot US inflation data that revived worries about further Federal Reserve rate hikes and hit companies that depend on debt to build AI infrastructure. Mondi fell 7.9% after the paper and packaging group raised prices on several paper grades in the third quarter to offset higher energy and raw material costs. Antofagasta slid 4.1% after reporting year-to-date copper output of 436,900 tons, down 8.3% from a year earlier.

Consumer prices in France rose 3.4% year on year in September on an EU-harmonised basis, in line with the preliminary reading. Traders put the chance of a quarter-point ECB rate increase in December at 87%. Separately, four people close to the World Economic Forum said Christine Lagarde could be named its next chair as soon as next month, which would mean she leaves the ECB early.

why it matters

Expectations for tighter monetary policy keep pressure on long-duration technology stocks and firms that rely on borrowing for growth. The outlook for ECB decisions and a possible leadership change at the central bank add uncertainty for euro-area assets.

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