European markets extend losses as investors focus on Nvidia and fading expectations for a December rate cut

Indices

The main European indices are exhibiting a period of short-term consolidation after recent rallies to or near record highs. The FTSE MIB (FTSEMIB.MI) is currently trading at 42802.74, registering a daily decline of -2.20379 but sustaining a STRONG_LONG trend, which suggests robust underlying momentum, especially from institutional flows into banking and energy stocks. The DAX Performance Index (^GDAXI) trades at 23139.27, down -1.91284, signaling consolidation near record territory with a flat micro-trend.

France’s CAC 40 (^FCHI) stands at 7964.43, posting a -1.90405 decline amid political uncertainty, maintaining a flat technical trend that reflects investor caution. The FTSE 100 (^FTSE) trades at 9529, down -1.51342, with a flat trend as gains in energy and finance offset broader market caution.

Spain's IBEX 35 (^IBEX) is at 15798.1, showing a -2.31564 decline, but remaining well above its key averages, which underpins a constructive longer-term trend. The Euro STOXX 50 (^STOXX50E) is quoted at 5527.81, down -2.00552, but retains a STRONG_LONG trend, reflecting continued bullish conviction in leading Eurozone blue chips.

These movements collectively suggest a tactical pause within an overarching bullish structure, with momentum strategies favored in Italy and pan-European indices, while other markets remain range-bound due to macro and political risks.

Stocks

Sector rotation is highly visible across European equities. Banking and basic resources are leading gains, with steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) each advancing by over 3, driven by favorable changes to European steel import quotas. Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) have posted impressive year-to-date returns of 67 and 47, supporting the IBEX 35’s resilience.

Conversely, the automotive and technology sectors are underperforming. BMW (BMW:GR) has dropped 8.9 following a weak earnings outlook, while ASML (ASML.AS) and ASM International (ASMI.AS) are facing renewed chip export restrictions. French banks Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP) have also reported declines, contributing to pressure on the CAC 40.

Among notable individual movers, SmartKem, Inc. (SMTK) has surged 17.36111, highlighting opportunities in high-momentum small caps. On the downside, Biodexa Pharmaceuticals Plc (BDRX) and Argo Blockchain plc 8.75% Senior Notes due 2026 (ARBKL) have seen steep declines, down -17.58059 and -12.4031 respectively.

Active stock selection remains essential, with overweight recommendations in banking, basic resources, and healthcare, while a cautious stance is warranted for technology and financials exposed to regulatory scrutiny.

Economic News

Recent macroeconomic data present a mixed landscape. Spain’s Q3 GDP growth rate slowed to 0.6 from 0.8, and retail sales softened to 4.2, down from 4.7, signaling a cooling in consumer demand. In contrast, Eurozone consumer confidence improved by 0.7 to -14.2, surpassing expectations and supporting a firmer outlook for consumption-driven sectors.

Political instability in France, including the resignation of the prime minister, has heightened headline risk and contributed to cautious positioning in the CAC 40. Additionally, the European Commission has revised its 2025 eurozone growth forecast upwards to 1.3, reflecting optimism from a surge in exports and a robust September trade surplus of 19.4.

Economic Events

Several high-impact macroeconomic releases are in focus this week. Upcoming events include Eurozone Industrial Production and GDP figures, Germany’s ZEW Economic Sentiment Index, and France’s Consumer Price Index. These data points will be pivotal for shaping expectations around regional growth and inflation. Central bank meetings, notably those of the European Central Bank and the U.S. Federal Reserve, are also drawing attention, with anticipated policy statements likely to influence rate-sensitive sectors and risk appetite.

Spanish government bond auctions, which have shown easing funding costs, continue to support sovereign debt and broader risk assets. Investors are advised to remain vigilant ahead of these events, as they could be catalysts for renewed volatility or upside momentum.

Market Sentiment

Sentiment across European equities is best described as cautiously optimistic. Sustained capital inflows into blue-chip indices like the Euro STOXX 50 and FTSE MIB are underpinned by stable credit conditions and expectations for accommodative central bank policies. Outperformance in basic resources and banking is helping to offset persistent weakness in autos and technology, encouraging a sector-rotational approach among investors.

The prevailing technical and macroeconomic environment remains supportive of further upside in leading benchmarks. However, a prudent “buy the dip” mentality is prevailing, particularly with heightened event risk and the potential for negative surprises from regulatory or political developments.

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