European stock markets open mixed and uncertain amid renewed US-China tensions. Focus on corporate earnings

Indices

Major European indices are holding firm near or just below their all-time highs, demonstrating ongoing resilience and robust institutional inflows. The FTSE MIB Index 42314.4 has registered a moderate gain, supported by strength in banking and energy sectors. The DAX Performance Index 24110.74 remains resilient just off its record high, reflecting continued confidence in German blue chips. France’s CAC 40 8242.47 is trading with slight softness but still near peak levels, suggesting cautious optimism amid political developments.

The FTSE 100 9539.55 shows steady momentum driven by financials and energy, while Spain’s IBEX 35 15740 holds a bullish undertone just below its annual peak. The Euro STOXX 50 5650 continues to indicate a strong long-term bullish trend, with persistent institutional inflows and broad-based confidence across the euro area.

Short-term trend signals remain “strong long” for the FTSE MIB and Euro STOXX 50, suggesting that trend-following strategies focused on outperforming indices are currently favored. Other major indices display a flat to moderately positive bias, reflecting a market environment that rewards selectivity and sector rotation.

Stocks

Sector rotation remains the dominant theme across European equities. 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 delivered remarkable year-to-date gains of 67 and 47, further supporting the IBEX 35.

In contrast, automotive stocks such as BMW (BMW:GR) have fallen 8.9 after negative earnings outlooks, while technology leaders like ASML (ASML.AS) and ASMI (ASMI.AS) remain under pressure due to renewed chip export restrictions. French banks, including Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP), have posted declines, exerting downward pressure on the CAC 40. Given these trends, trading strategies should focus on momentum in resources and banking, while maintaining a defensive stance in autos and technology.

Economic News

Recent data releases have reinforced the positive tone in European equities. Spain’s Industrial Production Year-over-Year for August came in at 3.4, outperforming the previous reading of 2.7. This robust industrial activity has directly boosted the IBEX 35 and contributed to the constructive outlook for the Spanish economy. Euronext’s record fixed-income trading revenues in Q1 2025 signal heightened investor participation and volatility, while recent policy changes such as the European Commission’s adjustment to steel import quotas have propelled resource stocks.

Political developments, particularly in France where pension reform has been delayed, have helped stabilize sentiment and reduced risk premiums in French government bonds. In Germany, economic challenges and increased outbound investment to the U.S. persist, but the DAX remains resilient thanks to blue-chip strength.

Economic Events

Key macroeconomic events for 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 significantly influence expectations for future interest rate moves and the performance of rate-sensitive sectors. In addition, scheduled Spanish government bond auctions, with recent results indicating easing funding costs, are 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 being driven by expectations of improving credit conditions and supportive central bank policies. The outperformance in basic resources and banking is being balanced by continued weakness in autos and technology, reflecting a tactical, sector-rotational approach among institutional investors. Despite lingering headwinds from political and regulatory uncertainties, both the technical and fundamental backdrops remain constructive, favoring 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.