Europea markets close higher on banking and resource strength; CAC surges amid political relief

Indices

Major European indices are trading at or near record levels, reflecting resilience and ongoing bullish momentum across the region. The FTSE MIB Index (FTSEMIB.MI) is currently quoted at 42331.85, up 1.01403, driven by continued gains in banking and energy stocks. The DAX Performance Index (^GDAXI) stands at 24272.86, reflecting a modest advance of 0.37835 and maintaining proximity to its all-time highs, suggesting continued strength in German blue chips.

France's CAC 40 (^FCHI) is trading at 8188.59, posting a robust gain of 3.39625, with recent political developments providing some relief to investors. The FTSE 100 (^FTSE) is at 9434.18 with a slight uptick of 0.10006, underpinned by strength in energy and financials.

The IBEX 35 (^IBEX) is quoted at 15622.2, holding just below annual highs and up 0.33333, with the banking sector providing leadership. The Euro STOXX 50 (^STOXX50E) is at 5648.99, up 0.7843, and continues to exhibit a strong long-term bullish trend, indicating sustained institutional inflows into European blue-chip equities. Short-term signals are strong long for both the FTSE MIB Index and Euro STOXX 50, while other indices show flat or cautiously positive momentum.

Stocks

Sector rotation is the dominant theme, with basic resources and banking stocks outperforming. Steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) have each advanced over 3 on policy changes regarding European steel import quotas. In Spain, Sabadell (SABE.MC) and Caixabank (CABK.MC) have posted impressive gains of 67 and 47 year-to-date, further supporting IBEX 35 strength. Conversely, automotive stocks have lagged, with BMW (BMW:GR) down 8.9 following a downward revision in its earnings outlook.

Technology names such as ASML (ASML.AS) and ASMI (ASMI.AS) have posted modest losses amid renewed chip export concerns, while French banks like Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) are under pressure, weighing on the CAC 40. Trading strategies should continue to focus on momentum in basic resources and remain cautious in auto and technology sectors.

Economic News

Recent economic releases have provided a supportive backdrop for equities. Spain’s Industrial Production YoY for August was reported at 3.4, outpacing the previous value of 2.7 and signaling robust industrial activity, which has supported the IBEX 35. Euronext has reported record fixed-income trading revenues in Q1 2025, highlighting robust market participation and volatility.

French political developments have reduced some uncertainty, with Prime Minister Sébastien Lecornu surviving a no-confidence vote and suspending pension reforms, which has helped stabilize the CAC 40. Nevertheless, regulatory and political uncertainties continue to affect the banking sector and French equities overall.

Economic Events

Key macroeconomic events this week include the release of Eurozone Industrial Production and GDP data, the ZEW Economic Sentiment Index in Germany, and France’s CPI. Minutes from the Federal Reserve and European Central Bank meetings are highly anticipated and could influence interest rate outlooks, particularly affecting rate-sensitive sectors. Spain is conducting government bond auctions, with recent results such as the 5-Year Bonos Auction at 2.443, a decline of -1.611, and the 10-Year Obligacion Auction at 3.085, down -4.489, indicating easing funding costs.

Market Sentiment

Market sentiment remains cautiously optimistic across European equities. Sustained inflows into blue-chip indices, especially the Euro STOXX 50, are driven by the outlook for improving credit conditions and supportive central bank policies. Outperformance in basic resources and banking sectors contrasts with ongoing weakness in autos and technology, reflecting a tactical approach among investors. Despite short-term headwinds from political risks in France and regulatory uncertainty in banking, the technical backdrop remains constructive, suggesting the potential for further gains in pan-European equities.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.