Europe open: Markets pause at one-month high, but pharma stocks jump

(Sharecast News) - European stocks were mixed on Wednesday morning, with upside limited after markets settled at a one-month high the previous session, as investors awaited another barrage of economic data. The Stoxx 600 was up just 0.1% at 558.78 early on - its highest since 25 August.

More record highs in London (+0.3%) and a surge in Zurich (+1.1%) - helped by strong gains in the pharma sector - were countered by a flat performance in Paris and falls of 0.4-0.5% in Frankfurt, Milan and Madrid.

Markets had rallied late Tuesday afternoon after European Central Bank chief Christine Lagarde said that inflation risks across the eurozone were "contained". In a speech in Finland, Lagarde said that price pressures are unlikely to move from the 2% target despite ongoing trade uncertainties.

Meanwhile, Wall Street stocks finished higher overnight despite the US government shutdown going into effect at midnight after Democrats and Republicans failed to come to a spending agreement.

In economic data on Wednesday, Nationwide's UK housing price index rose 0.5% in September, rebounding after a 0.1% decline in August, coming in ahead of the 0.2% consensus forecast.

Swiss retail sales fell at a year-on-year rate of 0.2% in August following 0.9% growth the previous month, according to the Swiss Federal Statistical Office, marking its biggest annual drop in 14 months.

Still to come, a host of manufacturing purchasing managers' indices (PMIs) will be released across the continent, with little to no economic activity growth expected in Italy, France, Germany and the UK.

Meanwhile, markets will get their first look at preliminary inflation estimates for September, with the year-on-year change in the eurozone consumer price index expected to tick up to 2.2% from 2.0% in August.

Market movers

Pharmaceutical stocks were rising strongly across the continent following the announcement that the Trump administration was implementing so-called 'Most Favoured Nation' drug pricing plans, with drugmakers encouraged to drop US prices in exchange for more lenient tariffs on imports.

"Overall, we see Pfizer's agreement on MFN as a potential bellwether for the sector which, we anticipate is likely to be replicated by EU Pharma companies and should therefore result in a broadly manageable impact from MFN on EU Pharma, reassuring investors," JPMorgan analysts said in a research note.

American firm Pfizer struck a deal for a three-year grace period from sector-specific tariffs, lifting shares of European names Merck, AstraZeneca, Roche and Novartis early on.

Sportswear and apparel groups Puma and Adidas rose after sector leader Nike posted a surprise increase in quarterly sales on Tuesday evening - though the American brand did warn about continued weakness in China, which may keep a lid on gains for its European peers on Wednesday.