European stocks showed cautious optimism on Wednesday morning, with the Stoxx 600 index rising 0.12%, extending gains from the previous day to reach a new two-year high. Positive momentum appeared in various sectors, especially in insurance and mining stocks, which rose by 0.7%. However, the retail sector saw a setback, with a decline of 1.6%.
The impact of corporate profits on major players
The market witnessed a wave of corporate results, which greatly affected the performance of individual stocks. Danish pharmaceutical company Novo Nordisk's performance exceeded expectations, pushing its shares up 3.4% in early trading.
In contrast, Swedish retailer H&M faced challenges as its shares fell by 7.4%. The unexpected announcement of a new CEO and failure to meet operating profit expectations led to the decline. H&M reported a 1% decline in sales for 2023 in local currencies and a 4% year-over-year decline in the fourth quarter.
Insights into the performance of pharmaceutical giants
Two major pharmaceutical companies, Novartis and Novo Nordisk, have shown outstanding results. Novartis reported strong 10% growth in net sales and an 18% increase in core operating income while also revealing net sales growth forecasts of mid-single-digit growth and high-single-digit core operating income growth for next year. However, Novartis' core net income was below consensus analyst expectations, leading to a 4% decline in the Swiss-listed shares.
On the other hand, Novo Nordisk forecasts an impressive growth range of 18% to 25% for 2024, driven by increasing demand for diabetes and weight loss drugs. The Danish pharmaceutical company's notable 31% increase in net sales year-on-year, reaching DKK 232.26 billion ($33.7 billion) in 2023, confirmed its strong position in the market.
