European markets end weak ahead of the FOMC meeting, Powell’s speech on U.S. rates, and the ECB decision

Indices

Major European indices are exhibiting notable resilience, trading at or just below record levels, reflecting robust institutional inflows and ongoing market confidence. The FTSE MIB Index (FTSEMIB.MI) is currently at 43110.06, posting a daily gain of 198.49 and up 0.46256, supported by strength in banking and energy sectors. The index is demonstrating a “strong long” trend, indicating persistent buy-side momentum and positioning Italy as a leadership market in Europe.

The DAX Performance Index (^GDAXI) trades at 24304.08, slightly down by -4.7 or -0.01933458, and showing a flat micro-trend, which suggests consolidation at record territory as investors adopt a cautious stance.

France’s CAC 40 (^FCHI) stands at 8215.27, down -23.91 or -0.2902, with a flat trend as the market digests political developments and sector-specific risks.

The FTSE 100 (^FTSE) is at 9706.66, up 52.84 or 0.54735, maintaining a flat trend as energy and financials provide support.

Spain’s IBEX 35 (^IBEX) posts at 16095.1, gaining 94.9 or 0.59312, and setting new highs, though the short-term trend is flat after a strong rally.

The Euro STOXX 50 (^STOXX50E) is at 5703.72, down -7.34 or -0.12852, but still holding a “strong long” trend, highlighting persistent institutional inflows and broad-based pan-European confidence.

Overall, the FTSE MIB and Euro STOXX 50 show clear buy signals with strong long-term momentum, while other indices display consolidation or flat short-term trends. This divergence suggests selective bullishness and continued sector leadership.

Stocks

Sector rotation remains the dominant theme across European equities. Basic resources and banking names are outperforming, led by steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST), each advancing over 3 following adjustments to European steel import quotas. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have delivered remarkable year-to-date returns of 67 and 47, underpinning the strength of the IBEX 35.

Conversely, the automotive sector is facing headwinds, with BMW (BMW:GR) down 8.9 after lowering its earnings outlook due to trade tensions and demand concerns. Technology names like ASML (ASML.AS) and ASMI (ASMI.AS) remain pressured by renewed chip export restrictions. French banks Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) have also registered declines, weighing on the CAC 40.

Momentum strategies currently favor basic resources and banking, while a defensive posture is recommended in auto and technology sectors due to sector-specific risks and macro uncertainty.

Economic News

Recent economic data have reinforced the positive tone in European equities. In Spain, Industrial Production Year-over-Year for August rose to 3.4, surpassing the previous 2.7, which has directly supported IBEX 35 momentum. However, Spain’s trade balance for August widened to -6 from -4.01, a deterioration of -49.626, which could limit further upside for Spanish equities in the near term.

In France, the delay of pension reform has steadied market sentiment and contributed to a decrease in the 10-year OAT yield to 3.404. Eurozone consumer confidence improved in October by 0.7 to -14.2, defying consensus and boosting prospects for consumer-driven sectors.

Economic Events

Key economic events this week include the release of Eurozone Industrial Production and GDP data, Germany’s ZEW Economic Sentiment Index, and France’s Consumer Price Index. Central bank meeting minutes from the European Central Bank and the Federal Reserve are highly anticipated and could swiftly adjust expectations for future rate policy. For Spain, high-impact events such as Retail Sales MoM (estimate: 0.7), GDP Growth Rate QoQ (estimate: 0.6), and Inflation Rate YoY (estimate: 2.9) are set for release, which may shape short-term market direction for IBEX 35 and related sectors.

Market Sentiment

Sentiment across European equities remains cautiously optimistic. Sustained inflows into blue-chip indices, especially the Euro STOXX 50 and FTSE MIB, are driven by expectations of improving credit conditions and supportive central bank policies. Outperformance in basic resources and banking is being balanced by persistent weakness in autos and technology, reflecting a tactical sector-rotational approach among institutional investors. Despite ongoing geopolitical and regulatory uncertainties, technical and fundamental backdrops are constructive, supporting further gains in leading European benchmarks, though near-term caution is warranted ahead of key economic releases.

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