In a downward trend, European stock markets closed mostly lower on Monday, reflecting broader concerns in the financial sector. The Stoxx Europe 600 index eased by 0.18%, while Switzerland's Market Index recorded a slight decline of 0.22%. France's CAC suffered a more substantial loss of 0.98%, and Germany's DAX dropped by 0.49%.
Contrarily, the FTSE in London showed a rare positive uptick, gaining 0.1%, amidst mixed signals about the economic landscape across Europe. In specific national economic indicators, Italy experienced a decline in seasonally adjusted exports for June, which fell by 0.8% compared to May. Correspondingly, imports also decreased significantly by 3.5%, as per data released by the Italian National Institute of Statistics.
This decline raises questions regarding the health of Italy's trade balance and economic resilience in the face of fluctuating demand. Moving to Austria, the manufacturing sector showed troubling signs, with the seasonally adjusted UniCredit Bank Austria Manufacturing Purchasing Managers' Index decreasing to 43.1 in July, the lowest reading since March.
This marks a drop from 43.6 in June and indicates a contraction in new orders, a decline in employment figures, and an acceleration in the depletion of stocks of inputs, which may signal challenges ahead for Austria's industrial activity. On the corporate front, notable developments emerged from Germany as the country's competition regulator gave the green light for Volkswagen's acquisition of a minority stake in Rivian Automotive, alongside the formation of a joint venture between the two companies.
This move signifies Volkswagen's strategic investment in electric vehicle technology and innovation, aligning with industry trends towards sustainable transportation. Shares of Reckitt Benckiser, a prominent British consumer goods company, faced a sharp decline of 8.1% in London trading. This drop occurred following a jury's decision that ordered Abbott Laboratories, another baby formula manufacturer, to pay a staggering $495 million for failing to adequately disclose the potential risks of its Similac premature infant formula, which has been linked to a serious bowel disease.
The legal challenges facing Abbott, with nearly 1,000 lawsuits filed in US federal or state courts, have raised concerns about the stability and safety in the infant nutrition sector. Reckitt Benckiser responded to the scrutiny, stating, "We will continue to vigorously defend ourselves against plaintiff lawyers' allegations in the interest of safeguarding the health of premature babies." This assertion underlines the company’s commitment to maintaining its market position while navigating the complex legal landscape before it. In a more positive light, shares of pharmaceutical giant Merck rose by 3.1%, marking the most significant gain on the DAX index for the day.
This uptick followed a positive recommendation from a committee of the European Medicines Agency for the combined usage of Merck's Keytruda with Padcev from Pfizer and Astellas Pharma in treating adults suffering from unresectable or metastatic urothelial carcinoma. Such endorsements can be pivotal for Merck, enhancing its market potential and investor confidence. Conversely, Stellantis experienced a notable downturn as shares fell by 3.3% in Paris after Deutsche Bank downgraded the stock from 'buy' to 'hold', while also cutting the price target significantly from $37.91 to $24.92.
This action reflects concerns about the automaker’s future performance amidst a dynamic automotive industry environment characterized by shifting consumer preferences and regulatory changes. Finally, Entain’s shares plummeted by 7.6% in London after disclosing that its joint venture with MGM Resorts International, BetMGM, incurred substantial losses of $123 million in the first half of the year.
The company anticipates similar financial struggles for the second half, raising alerts about sustainability and market performance in the competitive gaming sector, which has faced increasing regulatory scrutiny and consumer challenges..