[MARKET ANALYSIS] European bourses hit amid higher energy prices; NOVN SW on track for its biggest daily loss since Covid 2020

European bourses are softer across the board, Euro Stoxx 50 -0.5%, with clear underperformance in the SMI, -1.5% (see Novartis below). The disappointing risk tone comes amid upside in energy prices. The Saudi Energy Minister said a number of energy facilities and utilities were hit, resulting in operations being temporarily halted. This was later confirmed in a Yemeni Houthis statement. Sectors point to a mixed picture. Food, Beverages & Tobacco is the clear outperformer, with Optimised Personal Care and Energy rounding out the top 3 sector gainers. On the other hand, Health Care is the laggard, with Banks and Insurance completing the underperformers. Another setback for Novartis (-9.7%) this morning, after it announced that its del-desiran failed to meet the primary endpoints in its late-stage trial. Hopes were high for del-desiran after it was a key reason for the USD 12bln takeover of Avidity Biosciences. In an interview with Bloomberg, the CEO said the drug had a peak sales potential of over USD 5bln. This comes after two other negative announcements, in which a trial was halted due to the death of three patients and in which its pelacarsen failed to meet endpoints. Analysts at Vontobel have held their hold rating; however, they state that today's failure is a major pipeline setback that has not helped confidence in other therapies Novartis gained with Avidity. Other key movers: Computacenter (+2.2%), strong H1 metrics and raises its FY26 outlook; Sandoz (+5.1%), confirms its 2028 outlook and set out new 2030 guidance and targets 100 biosimilars by 2040; Infineon (-3.5%), downgraded to equal weight at Morgan Stanley; Schneider Electric (-0.8%), downgraded to neutral at Santander. US equity futures point to a softer open, ES -0.4%, in line with their European peers as the cash market returns from holiday.