EU stock markets shake off early caution and close in positive territory. FTSE MIB and CAC 40 lead the gains

Indices

European equity markets are maintaining elevated levels, with most major indices trading near or just below their record highs. The FTSE MIB Index 42.647,00 is showing robust momentum, up by 0.60%, driven by strength in banking and energy sectors. The DAX Performance Index 24342,47 is trading just below its record, with a modest gain of 0.15%, signaling continued resilience among German blue chips. France’s CAC 40 8.258.86 is also advancing, up 0.64%, reflecting cautious optimism amid political developments.

The FTSE 100 9.422,41 is maintaining steady upward momentum, supported by energy and financials, with a gain of 0.20%. The IBEX 35 15.757,74, despite a slight decline of -0.56%, remains near its annual highs, sustained by robust industrial and banking performance. The Euro STOXX 50 5687.05 is recording a modest gain of 0.11%, and technical signals indicate a strong long-term bullish trend, particularly for FTSE MIB and Euro STOXX 50, with flat or marginally positive short-term momentum in other indices. This overall strength suggests institutional inflows and a positive bias for trend-following strategies.

Stocks

Sector rotation is a defining feature of the current 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 after the European Commission moved to ease steel import quotas. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have achieved remarkable year-to-date gains of 67 and 47, further supporting the IBEX 35.

In contrast, the automotive sector is under pressure: BMW (BMW:GR) has dropped 8.9 after a negative earnings outlook, and technology leaders such as ASML (ASML.AS) and ASMI (ASMI.AS) have faced modest losses due to renewed chip export restrictions. French banks, including Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP), have declined, weighing on the CAC 40. Given these differentials, momentum strategies focused on resources and banking are favored, while defensive positioning in autos and technology is warranted.

Economic News

Recent economic data continue to underpin the positive tone in European equities. Spain’s Industrial Production Year-over-Year for August registered at 3.4, surpassing the previous 2.7, which has lent direct support to the IBEX 35. Euronext’s record fixed-income trading revenues in Q1 2025 signal robust investor participation and heightened volatility, benefiting resource and banking sectors. Meanwhile, French political stability has helped bring down the 10-year OAT yield to 3.404, contributing to the constructive backdrop.

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 the Federal Reserve and European Central Bank are highly anticipated and could alter expectations for rate-sensitive sectors. Spanish government bond auctions, including 5-Year Bonos and 10-Year Obligacion, have recently shown declining yields, which supports a positive outlook for sovereign debt and risk assets across the region.

Market Sentiment

Market sentiment throughout European equities remains cautiously optimistic. Sustained flows into blue-chip indices—especially the Euro STOXX 50—are propelled by expectations of improving credit conditions and supportive central bank policies. The outperformance by basic resources and banking is being balanced by continued weakness in automotive and technology sectors, indicative of a tactical, sector-rotational approach among investors. While political and regulatory headwinds persist, especially in France and the banking sector, the technical and fundamental backdrop remains constructive, favoring further gains 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.