Eurozone opens in deep red amid concerns over US regional banks, Milan drops 2.1%

Indices

European benchmarks are exhibiting mixed performance intraday, reflecting a shift in sentiment as markets digest sector rotation, political uncertainty, and banking sector volatility. The FTSE MIB Index (FTSEMIB.MI) is quoted at 41446.00, down -2,1889, signaling a pause after recent highs but maintaining a strong long-term bullish trend. Germany’s DAX Performance Index (^GDAXI) trades at 23779.78, down -2.0287, signaling near-term caution but still close to record levels. France’s CAC 40 (^FCHI) is at 8099.77, up slightly by 0.28191, reflecting cautious optimism following recent political relief.

The FTSE 100 (^FTSE) stands at 9296.76, down -1.47656, showing softness amid global rate and banking concerns. Spain’s IBEX 35 (^IBEX) is at 15499, off by -0.93827 but retaining bullish undertones, underpinned by robust industrial data. The Euro STOXX 50 (^STOXX50E) registers 5572.26, down -1.411, but maintains a strong long-term uptrend, suggesting continued institutional interest. Short-term momentum remains strong for the FTSE MIB and Euro STOXX 50, with other indices presenting a flat or neutral bias, highlighting sector-driven divergence.

Stocks

Sector rotation remains the dominant force in European equities. Basic resources and banking stocks are outperforming, as seen with steelmakers like ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST), each gaining over 3 following favorable European Commission policy changes. Spanish banks such as Sabadell (SABE.MC) and Caixabank (CABK.MC) have advanced strongly year-to-date, reinforcing IBEX 35’s resilience. In contrast, automakers like BMW (BMW:GR) have fallen sharply by 8.9 after a downward earnings revision. Technology names such as ASML (ASML.AS) and ASMI (ASMI.AS) have posted modest losses, weighed by renewed chip export restrictions. French banks including Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) are under pressure, impacting the CAC 40. Trading strategies should emphasize momentum in resources and banks, while remaining cautious on autos and technology.

Economic News

Recent economic data continues to shape the European market landscape. Spain’s Industrial Production YoY for August came in at 3.4, surpassing the prior value of 2.7 and supporting the IBEX 35’s performance. Euronext reported record fixed-income trading revenues in Q1 2025, highlighting robust investor participation and ongoing volatility. Political developments in France, such as the suspension of pension reforms, have provided temporary relief to French equities, especially the CAC 40, though regulatory and banking uncertainty linger.

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, all of which could influence index direction and rate-sensitive sectors. Additionally, minutes from both the Federal Reserve and European Central Bank meetings are highly anticipated, with potential to sway sentiment and asset allocation decisions. Spanish government bond auctions are also scheduled, with recent results showing lower funding costs and contributing to positive sentiment in sovereign debt markets.

Market Sentiment

Market sentiment across European equities is cautiously optimistic. Sustained inflows into blue-chip indices, particularly the Euro STOXX 50, are driven by expectations for improved credit conditions and supportive central bank policies. Outperformance in basic resources and banking is balanced by continued weakness in autos and technology, reflecting a tactical, sector-rotational approach among investors. Political and regulatory uncertainties, especially in France and banking, remain near-term risks, but the technical backdrop is constructive and favors further upside in core European indices.

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