European stock markets buoyed by defence companies; Nestlé CEO dumped
Wall Street was closed for Labor Day.
With Wall Street closed for the US Labor Day holiday, all eyes were on Europe where stock markets nudged higher with gains for defence stocks such as the UK’s BAE Systems and Germany’s Rheinmetall after Norway chose Britain to supply it with new frigates and European Commission president Ursula von der Leyen said plans are underway to send troops to Ukraine as a part of a post-conflict security contingent.
Nestlé chief dumped chief executive Laurent Freixe with immediate effect over an undisclosed relationship that breached the food giant’s code of conduct.
Meanwhile, Denmark’s Novo Nordisk rallied on data showing its Wegovy drug delivers stronger heart benefits than rival Eli Lilly’s Mounjaro and Zepbound therapies.
And gold prices pushed to a new record as investors predict the Federal Reserve will cut its key interest rate late this month, with US jobs data later this week seen as firming up expectations on which way the central bank will go.
Circling the wagons
US markets were closed on Monday for the Labor Day weekend, while stock markets across the Atlantic were a touch stronger.
The UK’s FTSE 100 index edged up 0.1%, with miners gaining on the strong gold price and defence companies buoyed by Norway picking Britain to deliver new frigates worth £10 billion. BAE Systems rose 1.9%, Babcock gained 2.1% and Rolls Royce advanced 2.8%.
Defence firms were also stronger on the continent after European Commission president Ursula von der Leyen said Europe is preparing plans to send troops to Ukraine as part of a security contingent once the war in Ukraine ends, although both Russia and Ukraine ratcheted up airstrikes.
Germany’s DAX 30 advanced 0.6% with the likes of Rheinmetall and Hensoldt among gainers.
And Novo Nordisk gained 1.8% after the Danish weight-loss drugmaker said data showed its Wegovy drug cut the risk of heart attack, stroke or death by 57% compared to rival Eli Lilly’s Zepbound and Mounjaro drugs.
Meanwhile, Nestlé rose after the board fired chief executive Laurent Freixe with immediate effect after an investigation into an undisclosed romantic relationship with a direct subordinate that breached the food giant’s code of conduct. Freixe was appointed to the top job last year in a bid to revive growth after a period of sluggish sales.
Shiny stuff
Gold prices hit a new record, with futures up 0.9% at US$3,546 an ounce at 7am in Auckland, on expectations the US Federal Reserve will cut the federal funds rate at this month’s policy review.
US jobs data on Friday are seen as a key event on whether the Federal Open Market Committee will move.
“In the week ahead the key focus will be on the US employment report on Friday night, which is a key risk event for financial markets and could have a bearing on how markets trade through the rest of September,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The nonfarm payrolls print is widely seen as the only real hurdle getting in the way of a September rate cut by the Fed.”
Meanwhile, US Treasury secretary Scott Bessent said the central bank continues to be – and should be – independent, but has made a lot of mistakes, defending President Donald Trump’s right to fire governor Lisa Cook over claims of mortgage fraud.
The antipodes are looking at a muted start to the trading day, with Australian futures pointing to a 0.1% decline for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 59.01 US cents, unchanged from yesterday.
Local data today include June quarter terms of trade.
