FTSE 100 today: Stocks climb as European markets shrug off Trump’s pharma tariffs

European equities, including the FTSE 100, advanced despite new U.S. pharmaceutical tariffs, which notably impacted continental European pharma stocks like Novo Nordisk and Roche, causing declines of 1.2%-2.4%, while UK counterparts were mixed. Separately, Pennon Group projected strong 2025/26 profitability with approximately 60% EBITDA growth, slightly below analyst consensus. Concurrently, Ceres Power reported a 26% H1 2025 revenue drop to £21.1 million as it transitions from R&D to commercial operations, maintaining a strong balance sheet.

Analysis

European equity markets, including the FTSE 100 which rose approximately 1%, demonstrated resilience by advancing despite the announcement of new U.S. tariffs targeting pharmaceuticals. The impact of the 100% levy was concentrated on continental European pharmaceutical firms, with Novartis (NOVN), Roche (RO), and Novo Nordisk (NOVOb) declining between 1.2% and 2.4%. In contrast, the UK pharmaceutical sector showed a divergent response; AstraZeneca (AZN) experienced a minor 0.09% dip, while GSK plc (GSK) edged up 0.3% and Hikma Pharmaceuticals (HIK), a generics producer not affected by the tariffs, gained 1.7%. In corporate-specific news, Pennon Group (PNN) affirmed its 2025/26 outlook, forecasting a significant return to profitability with approximately 60% year-over-year EBITDA growth, a figure slightly below analyst consensus of 66-67% potentially due to revenue timing adjustments. Meanwhile, Ceres Power Holdings (CWR) reported a 26% revenue decrease to £21.1 million for H1 2025, a planned outcome of its strategic transition from R&D to commercialization, which was underscored by a strong balance sheet of £104.1 million in cash and a positive cash inflow of £1.6 million.

Key Decisions for Investors

• Investors in the European pharmaceutical sector should differentiate between continental firms like Novartis and Roche, which are directly exposed to the new U.S. tariffs, and potentially insulated UK-based or generic-focused companies like Hikma.
• For Pennon Group, the strong underlying profitability guidance should be weighed against the slight miss on EBITDA growth expectations, considering the potential for strategic revenue-smoothing to manage customer bills.
• When evaluating Ceres Power, focus should be placed on its strong balance sheet and positive cash flow as indicators of health during its strategic pivot to commercialization, rather than the headline 26% revenue decline caused by the absence of prior-year one-off license fees.
• The market's ability to absorb negative sector-specific news suggests underlying strength, but vigilance is required as trade policy announcements can create significant volatility and divergence between sectors.