European markets mixed after Fed and BoJ decisions: Milan weak ahead of the ECB

Indices

Major European indices are holding elevated levels, with some benchmarks trading at or near their annual or all-time highs. The FTSE MIB Index (FTSEMIB.MI) is currently at 43146.01, marking a slight retreat but maintaining a “strong long” technical trend, which underscores robust institutional inflows, especially in the banking and energy sectors. The DAX Performance Index (^GDAXI) trades at 24192.78 and shows a flat trend, suggesting consolidation near record territory and a pause among investors. The CAC 40 (^FCHI) sits at 8193.08, with a minor decline and a flat short-term trend, reflecting cautious sentiment amid France’s recent political instability. The FTSE 100 (^FTSE) is registering 9724.29, also exhibiting a flat micro-trend as gains in energy and finance are offset by investor prudence. Spain’s IBEX 35 (^IBEX) remains strong at 16071.5, hovering just below its annual peak but with momentum cooling following recent macro data. The Euro STOXX 50 (^STOXX50E) stands at 5713.33, maintaining a “strong long” technical signal and attracting broad-based inflows into eurozone blue chips. This technical backdrop favors momentum strategies in Italy and pan-European indices, while the flat trends in Germany, France, the UK, and Spain point to a selective, range-bound trading environment.

Stocks

Sector rotation is the dominant theme driving individual equities. Basic resources and banking stocks are at the forefront, with steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) each rising over 3 after favorable changes to European steel import quotas. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) continue to impress, posting year-to-date gains of 67 and 47 respectively, which has buoyed the IBEX 35. In contrast, the automotive sector is under pressure, with BMW (BMW:GR) down 8.9 after a negative earnings outlook, and technology leaders ASML (ASML.AS) and ASMI (ASMI.AS) weighed down by renewed chip export restrictions. French banks Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) have also declined, exerting pressure on the CAC 40. The prevailing tactical approach is to favor momentum and breakout trades in banking and resources, while maintaining defensive or wait-and-see stances in autos and technology due to ongoing sector-specific headwinds.

Economic News

Recent macroeconomic releases have produced mixed signals for European markets. In Spain, the GDP Growth Rate QoQ (Q3) was 0.6, a slowdown from 0.8, which may explain some moderation in the IBEX 35. Retail Sales YoY (Sep) softened to 4.2, down from 4.7, signaling a tempering in consumer demand. Eurozone consumer confidence improved in October, rising by 0.7 to -14.2, exceeding consensus expectations and pointing to a firmer outlook for consumer-related sectors. Recent political instability in France, including the resignation of the prime minister, contributed to a sharp 1.4 drop in the CAC 40, highlighting ongoing sensitivity to headline risk.

Economic Events

This week is marked by several high-impact macroeconomic releases that could drive market direction and volatility. Key data include Eurozone Industrial Production and GDP figures, the German ZEW Economic Sentiment Index, and France’s Consumer Price Index, which will be closely monitored for their implications on growth and inflation. Central bank policy meetings are in focus, with the European Central Bank and the U.S. Federal Reserve both set to announce decisions that could influence rate-sensitive sectors and overall risk appetite. Spanish government bond auctions, with recent results indicating easing funding costs, are providing additional support to sovereign debt and risk assets. The market is also watching for upcoming Spanish Consumer Confidence, estimated at 85, up from 82.9, which may signal incremental improvement in sentiment.

Market Sentiment

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