European stock markets open strong, led by banking shares; Milan gains 1.4%.

Indices

Major European stock indices are maintaining elevated levels, signaling ongoing strength across the region. The FTSE MIB Index FTSEMIB.MI is trading at 42348.48, up by 1.41379, driven by gains in banking and energy sectors—this reflects positive momentum and institutional interest. The DAX Performance Index ^GDAXI stands at 24110.79, up 1.1741, showing resilience near all-time highs and underscoring blue-chip strength in Germany. France’s CAC 40 ^FCHI is at 8233.83, up 0.55248, reflecting cautious gains amid ongoing political developments.

The FTSE 100 ^FTSE is trading at 9404.18, rising by 0.53033, supported by energy and financial stocks. The IBEX 35 ^IBEX posts 15829, jumping 1.46079, maintaining bullish undertones just off its annual peak. The Euro STOXX 50 ^STOXX50E is at 5665.25, up 1.03185, and is accompanied by a strong long-term bullish trend signal, indicating persistent institutional inflows and broad-based confidence.

Short-term momentum is “strong long” for FTSE MIB and Euro STOXX 50, while other indices show a flat to moderately positive bias. This environment favors trend-following strategies in outperforming benchmarks.

Stocks

Sector rotation remains a defining theme in the equity landscape. Basic resources and banking stocks are leading the rally, with steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) each advancing over 3 following changes to European steel import quotas. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have posted remarkable year-to-date gains of 67 and 47, further supporting IBEX 35. In contrast, automotive stocks such as BMW (BMW:GR) have declined 8.9 after issuing a negative earnings outlook, while technology names like ASML (ASML.AS) and ASMI (ASMI.AS) are under pressure from renewed chip export restrictions.

French banks, including Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP), have also experienced declines, which has weighed on the CAC 40. Trading strategies should continue to emphasize momentum in resources and banking, while remaining defensive in autos and technology.

Economic News

Recent economic data have underpinned positive sentiment in European equities. Spain’s Industrial Production YoY for August registered at 3.4, surpassing the previous 2.7, indicating robust industrial activity that has directly boosted IBEX 35 performance. Euronext’s record fixed-income trading revenues in Q1 2025 highlight strong investor participation and market volatility. Recent policy changes, such as the European Commission’s adjustment to steel import quotas, have propelled resource stocks.

Political risk remains in focus, particularly in France, where Prime Minister Sebastien Lecornu’s decision to delay pension reform until after the 2027 election has stabilized market sentiment and contributed to a fall in the 10-year OAT yield to 3.404.

Economic Events

Key macroeconomic events this week include the release of Eurozone Industrial Production and GDP data, the German ZEW Economic Sentiment Index, and France’s CPI. Central bank meeting minutes from both the Federal Reserve and European Central Bank are highly anticipated and could influence the trajectory of interest rates and rate-sensitive sectors. Spanish government bond auctions, including the 5-Year Bonos and 10-Year Obligacion, have recently shown easing funding costs, contributing to a positive outlook for sovereign debt and broader risk assets.

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 of improving credit conditions and supportive central bank policies. Outperformance in sectors such as basic resources and banking is being balanced by continued weakness in autos and technology, reflecting a tactical, sector-rotational approach among investors. Despite short-term headwinds from political and regulatory uncertainties, the technical and fundamental backdrop remains constructive, favoring further gains 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.