European stocks start the session down, weighed by defense sector losses and Ukraine peace discussions

Indices

The major European stock indices are demonstrating a blend of resilience and tactical consolidation, with several benchmarks trading at or near record highs. The FTSE MIB Index (FTSEMIB.MI) is quoted at 44.21K, posting a gain and maintaining a “STRONG_LONG” micro-trend. This persistent upward momentum, especially in banking and energy sectors, signals robust institutional flows and ongoing buy interest in Italian equities.

The DAX Performance Index (^GDAXI) trades at 24.12K, experiencing a minor decline and exhibiting a FLAT trend. This reflects a period of consolidation after previous advances, as German blue chips adjust to global trade uncertainties.

France’s CAC 40 (^FCHI) stands at 8.13K, recording a small uptick but holding a FLAT trend—mirroring investor caution amid ongoing political uncertainty. The FTSE 100 (^FTSE) is at 9.73K, with a slight loss and a FLAT trend, suggesting a tactical pause as UK markets digest recent gains.

The IBEX 35 (^IBEX) posts 17.06K, up marginally to fresh record highs, underpinned by strength in banking and basic resources, though its short-term trend remains FLAT. The Euro STOXX 50 (^STOXX50E), at 5.74K, maintains a STRONG_LONG signal, underlining continued bullish conviction in Eurozone blue chips. This constellation of trends suggests potential buy opportunities in the FTSE MIB and Euro STOXX 50, while flat signals in other indices advocate for patience and selective positioning.

Stocks

Sector rotation remains a defining feature of today’s market action. Banking and basic resources are clear outperformers, with Spanish banks such as Sabadell (SABE.MC) and Caixabank (CABK.MC) delivering year-to-date returns of 67 and 47, fueling the resilience of the IBEX 35. Steelmakers such as ArcelorMittal, Aperam, Thyssenkrupp, and SSAB have each advanced more than 3, buoyed by favorable regulatory changes for steel imports.

Conversely, the automotive and technology sectors are under pressure. BMW (BMW:GR) has declined by 8.9 after a weak earnings outlook, while French banks Société Générale, Crédit Agricole, and BNP Paribas have reported losses, impacting the CAC 40. Inditex (ITX.MC) surged 7 after robust winter sales, boosting the IBEX 35 to new highs. This bifurcation in sector performance suggests opportunities in banking and basic resources, while caution is warranted in autos and tech.

Economic News

Recent macroeconomic data provide a nuanced, yet generally constructive backdrop for European equities. Spain’s GDP growth has slowed to 0.6 from 0.8, and year-on-year retail sales growth eased to 4.2, indicating some cooling in consumer demand. However, Eurozone consumer confidence improved by 0.7 to -14.2, beating expectations and supporting consumer-facing sectors. Inflation remains contained, with the Eurozone CPI at 2.1, reducing pressure on the European Central Bank (ECB) for imminent policy tightening.

Economic Events

The macroeconomic calendar is dense this week, with several high-impact events likely to influence trading. Key data releases include Eurozone Industrial Production, GDP figures for both Germany and the wider region, Germany’s ZEW Economic Sentiment Index, and France’s Consumer Price Index. In Spain, the Producer Price Index, Consumer Confidence, and Retail Sales figures are especially relevant for IBEX 35 constituents. Central bank meetings, notably the upcoming ECB monetary policy session and the U.S. Federal Reserve’s FOMC meeting, are in sharp focus. The market is anticipating a 25 basis point rate cut from the Federal Reserve, and any guidance from Chair Powell could drive significant volatility in rate-sensitive sectors and global risk assets.

Market Sentiment

Overall sentiment across European equity markets is best described as cautiously optimistic. Sustained capital inflows into blue-chip indices such as the Euro STOXX 50 (^STOXX50E) and FTSE MIB Index (FTSEMIB.MI) are underpinned by stable credit conditions and expectations of continued accommodative central bank policies. Outperformance in banking and basic resources is helping offset persistent weakness in autos and technology, leading investors to adopt a tactical, sector-rotational approach. The prevalence of FLAT trends in several key indices signals a wait-and-see stance, as participants remain vigilant ahead of major economic and policy announcements. This environment favors selective positioning and risk management, while retaining an overall constructive view on leading benchmarks.

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