European shares flat as energy firms counter tech, healthcare drag By Reuters

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<span>© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 20, 2023. REUTERS/Staff</span><br />
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<p>By Amruta Khandekar</p>
<p>(Reuters) -European shares were flat on Friday, as a slump in technology stocks following software maker SAP’s downbeat forecast and declines in the healthcare sector were offset by gains in energy companies that tracked oil prices higher.</p>
<p>The pan-European index held steady at 463.72 points by 0831 GMT after closing at a one-month high on Thursday.</p>
<p>The index was set for slim weekly rise of 0.6%, largely driven by a rally in British shares following evidence of slowing domestic inflation. But concerns about China’s weak economic recovery and weakness in the technology sector amid the earnings season capped gains.</p>
<p>SAP fell 4.8% after the business software maker trimmed its full-year outlook for key cloud sales, dragging index down 0.5%.</p>
<p>Europe’s technology sector, already the biggest decliner among major sectors this week, fell 1.0%.</p>
<p>“The technology hardware sector has been on our least preferred list for most of this year, (but) we do favour software, so it’s a bit of a balance,” said Sutanya Chedda, European equity strategist at UBS.</p>
<p>Artificial intelligence could be a positive for software but weak sentiment and earnings could hurt the hardware sector, Chedda added.</p>
<p>Healthcare shares were also a big drag, with Lonza down 9.0% after the Swiss contract drug manufacturer cut its full-year outlook.</p>
<p>The mining sector dropped 1.7%, also hurt by a raft of disappointing results.</p>
<p>Swedish steelmaker SSAB slumped 14.8% to the bottom of the STOXX 600 after its operating profit halved in the second quarter, while Hydro fell 2.9% after the Norwegian aluminium producer raised its capital expenditure guidance.</p>
<p>Keeping declines in check, energy firms gained 0.5% as oil prices edged higher, with investors assessing chances of further stimulus from China. [O/R]</p>
<p>Investors are now focussed on another round of major central bank policy meetings next week for more clues on the global interest rate trajectory.</p>
<p><span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> Deutsche Bank </span></span> (ETR:) said it expected the European Central Bank to hike the deposit rate by 25 basis point to 3.75% on July 27 but added that a further hike in September cannot be ruled out, given the ECB’s commitment to bringing inflation under control.</p>
<p>Thales slipped 4.6% despite a guidance raise by the defence electronics firm, with Jefferies pointing to revised forex assumptions weighing on the outlook.</p>
<p>Second-quarter earnings for STOXX 600 companies are expected to fall 9.2% from the previous year, based on Refinitiv IBES data.</p>
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