European close: markets little changed, waiting for the Fed

Indices

Major European indices remain close to or just below their all-time highs, reflecting ongoing institutional support and selective sector momentum. The FTSE MIB (FTSEMIB.MI) is trading at 43212.09, registering a modest gain and exhibiting a strong long-term bullish trend. This persistent upside signals robust buying interest, particularly in Italian equities. The DAX Performance Index (^GDAXI) stands at 24118.74, consolidating near its record with a flat micro-trend, suggesting investor caution and a wait-and-see approach. France’s CAC 40 (^FCHI) is at 8198.6, showing slight softness but maintaining proximity to its annual peak, reflecting cautious optimism amid domestic political shifts.

The FTSE 100 (^FTSE) trades at 9752.53, with steady momentum driven by financials and energy, though its flat trend points to investor prudence after recent advances. Spain’s IBEX 35 (^IBEX) is at 16150.8, holding a bullish undertone just below its annual high, underpinned by strong financial sector performance. The Euro STOXX 50 (^STOXX50E), at 5701.26, continues to flash a strong long-term bullish trend, indicating persistent institutional inflows and widespread confidence in eurozone large caps.

Short-term technical signals highlight a “strong long” bias for the FTSE MIB and Euro STOXX 50, favoring momentum strategies, while flat trends in the DAX, CAC 40, FTSE 100, and IBEX 35 suggest a more selective, range-bound approach for traders.

Stocks

Sector rotation is 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 after European steel import quota revisions. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have delivered impressive year-to-date gains of 67 and 47, supporting the IBEX 35’s strength.

Conversely, automotive and technology sectors face headwinds. BMW (BMW:GR) has declined 8.9 on disappointing earnings, while ASML (ASML.AS) and ASMI (ASMI.AS) remain under pressure due to renewed chip export restrictions. French banks Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) have also posted declines, weighing on the CAC 40. Notably, Nokia (NOKIA) surged 9.3 on strong Q3 results, and Kering (KER) rose 8.5 on resilient demand, while Dassault Systèmes (DSY) and Sodexo (SW) experienced sharp declines after guidance cuts.

These dynamics suggest that momentum and breakout strategies are best suited for basic resources and banking, while defensive or wait-and-see stances are warranted for autos and tech due to ongoing sector-specific challenges.

Economic News

Recent economic data reinforces a cautiously constructive tone in European markets. Spain’s Industrial Production Year-over-Year for August came in at 3.4, outperforming the previous 2.7, directly boosting IBEX 35 sentiment and supporting the Spanish economy. In contrast, Spain’s trade balance for August deteriorated to -6 from -4.01, a drop of nearly -49.626, potentially limiting further upside for Spanish equities.

Eurozone consumer confidence improved in October by 0.7 to -14.2, exceeding consensus and indicating a firmer outlook for consumption-driven sectors. Policy support for a unified European stock exchange and an ECB commitment to maintain rates at 2.00 until at least 2027 have added stability to the investment environment.

Economic Events

A busy macroeconomic calendar this week includes the release of Eurozone Industrial Production and GDP data, the German ZEW Economic Sentiment Index, and France’s CPI. These events are crucial for gauging the outlook for growth and inflation and will likely influence rate-sensitive sectors and overall market trends. Central bank meeting minutes from both the Federal Reserve and the European Central Bank are also highly anticipated, with the market watching for signals about future interest rate moves.

Upcoming Spanish Consumer Confidence is estimated at 85, up from the previous 82.9, indicating incremental improvement. The outcome of these events could set the tone for both equity and fixed income markets across Europe.

Market Sentiment

Overall sentiment across European equities is cautiously optimistic, sustained by inflows into blue-chip indices—particularly the Euro STOXX 50 and FTSE MIB—on expectations of stable credit conditions and supportive central bank policy. The outperformance of basic resources and banking sectors is offsetting persistent weakness in autos and technology, illustrating a tactical, sector-rotational approach among investors. Despite ongoing geopolitical and regulatory uncertainties, the technical and macroeconomic backdrop remains constructive, supporting the case for further upside in the leading European benchmarks. However, near-term caution is warranted ahead of key economic releases and policy announcements.

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