European markets rise as optimism grows over a deal to end the U.S. shutdown. The FTSE MIB starts the week up 1.36%

Indices

The main European equity benchmarks remain near their annual or all-time highs, reflecting robust institutional inflows and resilient investor appetite, though signals of consolidation and selectivity are emerging across the board. The FTSE MIB Index (FTSEMIB.MI) is trading at 43503.91, with a strong gain of 1.36596 and a clear “strong long” trend, indicating persistent upside momentum and sustained demand for Italian equities, especially in banking and energy.

The DAX Performance Index (^GDAXI) stands at 23951.77, up by 1.6199, but exhibiting a flat micro-trend that implies consolidation after record territory advances. The CAC 40 (^FCHI) is at 8023.96, gaining 0.92803, yet also reflecting a flat trend as French equities absorb political and regulatory uncertainties.

The FTSE 100 (^FTSE) registers 9748.89, with a modest increase of 0.68494, as gains in energy and finance are counterbalanced by broader market caution. Spain’s IBEX 35 (^IBEX) trades at 16096, up by 1.22379, but with cooling momentum following softer macroeconomic releases.

The Euro STOXX 50 (^STOXX50E) is at 5651.69, rising 1.52986 and maintaining a “strong long” technical signal, reflecting broad-based institutional inflows and conviction in Eurozone blue chips. The momentum strategies remain favored in Italy and pan-European indices, while the flat trends in Germany, France, UK, and Spain suggest a selective, range-bound trading environment in the near term.

Stocks

Sector rotation is the prevailing theme, with banking and basic resources spearheading outperformance. Steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) have each advanced over 3 on favorable changes to European steel import quotas, signaling opportunity in cyclicals. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have delivered impressive year-to-date returns of 67 and 47, providing resilience for the IBEX 35.

On the defensive, the automotive and technology sectors continue to lag. BMW (BMW:GR) is down 8.9 following a disappointing earnings outlook, while ASML (ASML.AS) and ASM International (ASMI.AS) face renewed pressure from chip export restrictions. French banks Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) are also underperforming, weighing on the CAC 40.

These moves highlight tactical opportunities in banking and resources, while a defensive or wait-and-see stance remains prudent in autos and technology.

Economic News

Recent macroeconomic releases have delivered mixed signals for European markets. Spain’s Q3 GDP Growth Rate slowed to 0.6 from 0.8, which has tempered enthusiasm in the IBEX 35. Retail Sales YoY (Sep) in Spain softened to 4.2, down from 4.7, indicating a cooling in consumer demand.

Conversely, Eurozone consumer confidence improved by 0.7 to -14.2, surpassing expectations and providing a firmer outlook for consumer-driven sectors. Political instability in France, resulting in the resignation of the prime minister, has heightened sensitivity to headline risk in the CAC 40, while the European Central Bank keeps its deposit rate at 2, reinforcing expectations for stable credit conditions into 2025.

Economic Events

The calendar for this week features several high-impact macroeconomic releases likely to influence volatility and sector allocation. Key data includes Eurozone Industrial Production and GDP figures, the German ZEW Economic Sentiment Index, and France’s Consumer Price Index, all pivotal for gauging regional growth and inflation trends. Central bank meetings from the European Central Bank and the U.S. Federal Reserve are in focus, with their decisions expected to influence rate-sensitive sectors and overall risk appetite. Spanish government bond auctions, with recent results showing easing funding costs, continue to provide support to sovereign debt and risk assets. The EU Consumer Confidence survey, estimated at 85 (up from 82.9), may signal further improvement in sentiment.

Market Sentiment

Overall, sentiment across European equities is characterized by cautious optimism. Sustained capital inflows into blue-chip benchmarks such as the Euro STOXX 50 and FTSE MIB are underpinned by expectations of stable credit conditions and supportive central bank policies. Outperformance in basic resources and banking sectors is offsetting persistent weakness in autos and technology, pointing to a tactical, sector-rotational approach among investors. The prevailing technical and macroeconomic backdrop remains constructive, supporting further upside in leading indices, though near-term caution is warranted ahead of major 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.