European stock markets reached their lowest point in two weeks on Wednesday because investors worldwide were still worried that stock prices were too high.
The main European index, the STOXX 600, dropped 0.4%, trading at levels last seen around mid-October. The biggest losers were technology stocks, which fell 1.3%, while typically safer sectors like food and beverage stocks saw a slight increase.
These fears about high stock valuations came back this week after record-setting rallies in the US (Wall Street) and Asian markets, largely fueled by excitement over artificial intelligence. Comments from major US banks on Tuesday added to these worries.
Corporate earnings also drove market movements. Shares in Novo Nordisk (the maker of the drug Wegovy) slipped 2% after the company lowered its full-year profit forecast. This happened as the Danish drugmaker’s new CEO begins a major restructuring to better compete in the intense market for obesity drugs.
Another Danish company, Ambu (which makes endoscopy solutions), saw its shares plunge 12% after its results fell short of analyst predictions. In positive news, wind turbine maker Vestas saw its shares jump 10% after it reported third-quarter operating profits that were better than expected.
On the FX front, The dollar remained strong after hitting its highest level since April 1 late on Tuesday. The value of the US dollar index held steady at 100.16 after reaching a high of 100.25 at the close of trading on Tuesday. It also remained mostly unchanged against the euro, trading at 1.1486 per euro, following a 0.3% rise in the previous session that had pushed it to a seven-month high.
The nervousness that had caused traders to seek safety in foreign exchange markets in Asia disappeared by the time European trading began. This caused the safe-haven Japanese yen to lose its earlier gains, while currencies from the southern hemisphere, like the Australian and New Zealand dollars, moved higher., and the Swiss franc also stayed up.
Specifically, the risk-sensitive Australian dollar successfully bounced back from a 0.5% drop that had taken it to a multi-week low, ending the session slightly higher against the U.S. dollar. The New Zealand dollar recovered from a seven-month low (hit after the country reported its highest unemployment rate since 2016) and was last up 0.3%. However, the New Zealand currency did briefly drop to its lowest value against the Aussie dollar in 12 years.
Meanwhile, the British pound (sterling) struggled to rise, remaining near a seven-month low following hints from the British finance minister, Rachel Reeves, on Tuesday about potential broad tax increases in her upcoming budget.
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