Europe stocks head for a fresh record close, led by Roche and oil

On Nov 4, 2021

Europe’s main stock index was headed for its fourth-straight record close on Thursday, as investors cheered a fresh batch of earnings reports and a Roche stake sale by rival Novartis.

The Stoxx Europe 600
SXXP,
+0.45%
rose 0.4% to 483.64, putting it on track to surpass Wednesday’s closing high of 481.22. Among major regional indexes, the German DAX
DAX,
+0.64%
gained 0.5%, the French CAC 40
PX1,
+0.37%
increased 0.4% and the U.K. FTSE 100
UKX,
+0.55%
increased 0.2%.

The British pound
GBPUSD,
-1.24%
tumbled against the dollar, and gilt yields fell
TMBMKGB-10Y,
0.953%
after the Bank of England surprised markets by leaving key interest rates unchanged. Elsewhere, Germany reported a 1.3% rise in manufacturing orders in September, that marked a strong rebound from a revised 8.8% fall in August.

Among companies in focus, shares of heavily-weighted pharmaceutical group Roche
ROG,
+1.10%
rose 1.3% after Novartis
NVS,
-0.04%

NOVN,
-0.12%
said it would sell its roughly one-third voting stake back to its rival for $20.7 billion.

“The purchase should be immediately c.7% EPS [earnings per share] accretive, in our view, helpfully also likely ensuring sustained earnings growth next
year when COVID-19 sales may cliff,” said a team of Jefferies analysts led by Peter Welford, in a note to clients.

“Importantly we also see the deal lifting the overhang from debate around Roche potentially pursuing larger acquisitions in the near future given its likely net cash position by [year end], which it seeks to avoid,” said Welford.

BT shares
BT.A,
+9.22%
were among the top gainers, up 7% after the U.K. telecoms giant reported forecast-beating results, days after announcing it had hit its cost-savings targets ahead of schedule.

Elsewhere, Spain’s Telefonica
TEF,
-2.69%

TEF,
-3.73%
dropped more than 2% after the telecoms group reported upbeat results, but weakness in its home market.

Also higher were oil companies, with BP
BP,
+1.16%

BP,
+0.39%
up 1.8% and Royal Dutch Shell
RDSA,
+1.04%

RDSA,
+1.88%

RDS.A,
+0.49%
gaining nearly 1%. Share action tracted higher energy prices
CL00,
+0.61%

BRN00,
+0.89%,
up on expectations the Organization of the Petroleum Exporting Countries and its allies would not yield to pressure from the U.S. administration to speed up production increases.

A standout gainer was Alstria Office REIT
AOX,
+1.84%,
which surged nearly 17% after Brookfield Asset Management, via its Alexandrite Lake Lux Holdings private real estate…