European Markets Advance On German GDP Data, Novartis to Spinoff Sandoz

Bridgette Randall
25 Aug, 2022
Frankfurt

Stock markets in Europe closed higher after Germany reported better-than-expected economic growth. 

Germany's second quarter GDP increased 0.1% from the previous quarter and rose 1.8% from a year ago, lifted by household and government spending. 

Household spending rose 0.8% and government expenditures rose 2.3% in the quarter. 

The quarterly growth slowed considerably when compared to the performance in the first quarter, the Federal Statistics Office said Thursday. 

On a quarterly basis, the economy expanded at 0.8% and on an annual basis increased 3.9% in the first quarter. 

The latest data clearly showed weakening economic activities but still the economy is humming along despite the supply chain issues, loss of markets in Russia and elevated costs of inputs. 

A separate survey conducted by the Ifo institute showed weakening business sentiment in Germany. 

The business climate index declined to 88.5 points in August from 88.7 points in July.

Investors also overlooked the weak confidence among French manufacturers in August, matching the expectations. 

The DAX index added 0.4% to 13,217.96, the CAC-40 index fell 0.08% to 6,381.56, and the FTSE 100 index increased 0.1% to 7,479.74. 

Unibail-Rodamco-Westfield rose 3.9% to 53.91 euros after the property developer announced the sale of Westfield Santa Anita in Arcadia, California for $537.5 million. 

Novartis AG declined 0.8% to 80.20 Swiss francs after the drug maker said it plans to spinoff its biosimilar and generic business Sandoz next year as a standalone and publicly listed company. 

Sandoz will be the largest generic company in Europe, the Swiss drug maker said Thursday.   

The spinoff was widely anticipated after the company initiated business review last October and CEO Vas Narasimhan wants to sharpen focus on innovative new drugs. 

Over the past few months Sandoz has attracted interest from several generic makers and buyout firms but Novartis has not received any binding offer, Narasimhan added in a call with reporters. 

Delivery Hero SE declined 4.4% to 45.73 euros after the German food delivery company forecasted wider loss in the full-year 2022. 

Gross merchandise volume on the online platform increased 18% to 9.9 billion euros and total segment revenues jumped 38% to 2.1 billion euros in the second quarter.  

The food delivery company also guided third quarter gross merchandise volume to increase 7% on a quarterly basis to 10.6 billion euros and to 11.5 billion euros including the recent acquisition of Glovo. 

The delivery company revised its full-year 2022 adjusted EBITDA loss to range between 1.5% and 1.6% of gross merchandise volume from the previous estimated range between 0.9% and 1.0%.

The revised guidance includes losses of up to 300 million euros in its recently acquired Glovo business.