Cautious start for European markets, buoyed by Wall Street and Asian gains

Indices

Major European indices are trading close to their record highs, reflecting ongoing resilience and robust institutional inflows. The FTSE MIB Index 42618.07 has advanced, underpinned by strong gains in banking and energy sectors, and is displaying a 0.53243 that signals ongoing positive momentum. Meanwhile, the DAX Performance Index 24276.24 remains close to its all-time highs, with a slight 0.07189144 that demonstrates blue-chip strength in Germany. The CAC 40 8218.18 is also showing modest advances, reflecting a cautiously positive outlook amidst political developments.

The FTSE 100 9431.03 continues to edge higher, supported by energy and financial stocks, while the IBEX 35 15829.1 is just off its annual peak but maintains a bullish undertone. The Euro STOXX 50 5676.8, despite a marginal -0.07269936, remains in a strong long-term uptrend, indicating sustained institutional demand. Short-term momentum is “strong long” for the FTSE MIB and Euro STOXX 50, while other indices present flat to moderately positive signals, suggesting trend-following strategies remain favorable.

Stocks

Sector rotation continues to be a defining theme in the European equity landscape. Basic resources and banking stocks are leading the advance, with steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) each gaining over 3 following European Commission changes to steel import quotas. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have delivered remarkable year-to-date gains of 67 and 47, further supporting the IBEX 35.

Conversely, automotive stocks such as BMW (BMW:GR) have declined 8.9 after negative earnings outlooks, while technology leaders like ASML (ASML.AS) and ASMI (ASMI.AS) have faced modest losses due to renewed chip export restrictions. French banks—Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP)—are under pressure, exerting a drag on the CAC 40. Given these trends, trading strategies should emphasize momentum in resources and banking, while maintaining a defensive stance in autos and technology.

Economic News

Recent economic data have bolstered positive sentiment among European equities. Spain’s Industrial Production Year-over-Year for August was reported at 3.4, outperforming the previous value of 2.7 and supporting the IBEX 35’s recent performance. Euronext’s record fixed-income trading revenues in Q1 2025 underline robust investor participation and heightened market volatility. Policy moves, such as the European Commission’s steel quota adjustment, have notably propelled resource stocks, while ongoing regulatory and political uncertainties continue to weigh on banking and French equities.

Economic Events

This week’s pivotal macroeconomic events include the release of Eurozone Industrial Production and GDP data, the German ZEW Economic Sentiment Index, and France’s CPI. In addition, central bank meeting minutes from both the Federal Reserve and European Central Bank are highly anticipated, with the potential to influence the direction of interest rates and rate-sensitive sectors. Spanish government bond auctions, including recent 5-Year Bonos and 10-Year Obligacion issuances at declining yields, have contributed to a constructive outlook for sovereign debt and risk assets.

Market Sentiment

Market sentiment across European equities is cautiously optimistic. Sustained inflows into blue-chip indices—particularly the Euro STOXX 50—are being fueled by expectations of improving credit conditions and supportive central bank stances. Outperformance in basic resources and banking sectors is being counterbalanced by continued weakness in autos and technology, reflecting a tactical, sector-rotational approach among investors. While political risks in France and regulatory uncertainty in banking represent short-term headwinds, the overall technical and fundamental backdrop remains constructive, favoring further upside for 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.