Europe midday: Shares extend gains; Eurofins in focus after Muddy Waters report

24th Jun 2024 11:27

(Sharecast News) - European stocks extend gains on Monday as investors eyed more interest rate decisions and regional GDP readings later in the week, while shares in French scientific laboratory group Eurofins Scientific slumped after a note published by US activist hedge fund Muddy Waters accused it of financial irregularities.

The pan-regional Stoxx 600 index was down 0.46% at 517 in early deals, although across the Continent shares were broadly higher with France's CAC 40 up 0.71% a week out from the first round of national elections, with polls putting the far-right National Rally party and its allies in the lead.

Policymakers in Sweden and Turkey will unveil rate positions this week, while flash GDP readouts are due from France, Italy and Spain on Friday.

Investors will also have an eye on the US personal consumption expenditures report on Friday, which is the Federal Reserve's preferred measure of prices.

"European markets are in recovery mode, with widespread gains taking shape in early trade. Despite ongoing concerns around this weekend's French parliamentary election, French stocks are on the rise as investors buy the dip that saw the CAC lose almost 10% in a month," said Scope Markets analyst Joshua Mahony.

"Nonetheless, this weekend saw the RN party's head of economic policy, Jean-Philippe Tanguy strike a more cautious tone, promising to stick to the European Union's fiscal rules and reduce the deficit."

"While pledges such as their plan to cut value-added tax on energy from 20% to 5.5% had provided cause for concern, the fact that they are currently looking likely to fall short of a majority victory would indicate that their more radical policies could be curtailed."

In economic news, German business sentiment deteriorated in June, according to a survey released on Monday by the Ifo Institute.

The business climate index fell to 88.6 from 89.3 in May. Meanwhile, the current situation index was flat at 88.3 and the expectations index declined to 89.0 from 90.3.

The manufacturing gauge deteriorated to -9.2 in June from -6.5 a month earlier, while the service sector index ticked up to 4.2 from 1.8.

In equity news, Eurofins Scientific shares fell by more than 20% after Muddy Waters,, which recommends a "short" position on the stock, claimed the company had raised and then consumed billions of dollars supposedly to finance its growth.

"At best, Eurofins has a parasitic controlling shareholder who has been siphoning money from the company for two decades. However, we believe that Eurofins' account statements may contain significant overstatements of earnings, cash balances and other asset values," the hedge fund said.

"At best, Eurofins has a parasitic controlling shareholder who has been siphoning money from the company for two decades. Our view, however, is that Eurofins' financials could contain material overstatements of profits, cash balances, and other asset values. Eurofins is a company of oddities and contradictions."

Prudential shares gained 5% at one point as the insurance giant unveiled a $2bn share buyback after revising its free surplus requirement ratios.

Britvic shares fizzed as Carlsberg said PepsiCo had agreed to waive a change of control clause in its bottling arrangements with Britvic, potentially removing a hurdle from the Danish brewer's path to bid for the British company.

Hochtief topped the Stoxx as Jefferies upgraded the German construction firm to 'buy' from 'hold'.

Belgian pharmaceutical company argenx surged after its Vyvgart Hytrulo treatment for chronic inflammatory demyelinating polyneuropathy approved by the US FDA.

Reporting by Frank Prenesti for Sharecast.com