Europe’s equity benchmark rose on Monday, kicking off a busy week on a strong note as a surge in bank shares helped absorb the hit from higher oil prices.
The pan-European STOXX 600 index closed 0.65% higher at 635.65 points, posting its second consecutive day of gains.
After weeks of being swayed by broader economic factors such as crude prices and bond yields, investors are expected to zero in on corporate earnings this week.
Strong results could dispel the gloom following renewed tensions in the Middle East. However, France’s LVMH reported worse-than-expected third-quarter organic sales growth, as weak demand for its fashion and leather goods weighed.
Its shares closed 1.18% higher ahead of the report, while the luxury sector rose 0.95%.
Semiconductor equipment maker ASML and investment firm EQT are due to report later this week.
Banks find favour
“In areas such as banking, European and Asian stocks could offer stronger value and return potential than their US counterparts,” analysts at Julius Baer wrote.
Spain’s bank-heavy IBEX jumped 1.33%, the most among regional peers, while the STOXX 600 banking index advanced 1.5%.
Oil prices were hovering near two-week highs as attacks on
Saudi Arabia overshadowed the prospect of increased supplies
after US President Donald Trump hailed fresh Russian diesel
exports and a Russia-Ukraine ceasefire covering energy targets.
David Morrison, senior market analyst at Trade Nation, said
third-quarter earnings, especially from semiconductor companies
and other AI beneficiaries, would be key in shaping near-term
market sentiment.
Euro zone bond yields eased on Monday, further helping lift
sentiment for riskier assets.
However, yields remain near multi-year highs, reflecting
concerns that interest rates will stay higher for longer.
Traders currently expect the European Central Bank to keep
rates on hold at its October meeting, while pricing in a
quarter-point rate hike in December, according to LSEG-compiled
data.
Still, analysts point to limited scope for further ECB
tightening given the euro zone’s weak growth backdrop.
“The euro area cannot point to robust economic growth.
That’s simply not the case,” Morrison added.
Among other stock moves, Nordex advanced 3.9%
after the onshore wind turbine manufacturer said its project
order intake in the third quarter rose 30% year-on-year.
Vallourec rose 3.8% after the French steel tube
maker won a contract from TotalEnergies for the
Absheron gas field in Azerbaijan.
Inwit advanced 1.8% after Reuters reported
exclusively that the telecom towers company’s leading
shareholders were arranging the financing for a potential
take-private deal.
Telecom stocks were the biggest laggards, down
0.54%.
Source: Khaleej Times