European stocks recover from one-month lows as bond yields retreat
The ECB is expected to raise borrowing costs to 2.5% next week
European stocks rebounded from a month of declines on Thursday, September 3, as a global bond selloff eased and investors turned their focus to upcoming US economic data. The Stoxx 600 index climbed 0.49 percent to 649.1, bouncing back from a one-month low hit on Tuesday. Many regional indexes also recorded gains. Soitec, a French chip materials maker, led the Stoxx 600 index with a 10.3 percent increase following an announcement that it had upgraded its revenue growth outlook for the second quarter of 2027 to 50 percent year-on-year, from the previous estimate of 30 percent.
Oil prices saw a slight drop on Thursday, yet remained above $95 a barrel, while euro zone bond yields retreated from their multi-year highs. Kathleen Brooks, research director at XTB, stated that stopping the ongoing attacks from both sides in the Iran war is currently impossible, making it difficult to predict a meaningful pullback in commodity prices or a long-term recovery in bond yields as central banks will continue to be cautious about inflation risks.
According to a recent survey, growth in the euro zone's dominant services industry declined to a two-month low in August, although overall private sector activity remained robust. Traders are highly confident that the European Central Bank will raise borrowing costs to 2.5 percent at its upcoming policy meeting and deliver two additional quarter-point hikes by mid-2027.
Ricardo Castillo, head of investments at Mirabaud Group, expressed confidence that even with stagnant growth, the ECB may likely raise rates due to elevated oil prices, which have surged to their March and April highs, posing a challenge for European consumers. On Friday, traders will be particularly attentive to the US non-farm payrolls report for additional clues about the Federal Reserve's future policy moves.
WPP and Publicis both rose by 5.6 percent and 4.4 percent, respectively, following a media report that stated Publicis had secured PepsiCo's media account. Luxury stocks, on the other hand, facilitated sectoral losses, shedding 2 percent as investors became more cautious regarding the industry's recovery outlook. LVMH declined by 1.8 percent, while Hermes and Gucci-owner Kering saw drops of approximately 2 percent and 3 percent, respectively.
Commerzbank gained 2.3 percent after the German bank disclosed a new share buyback program of up to €1.2 billion (approximately $1.39 billion). Deutsche Telekom experienced a 1.1 percent increase following Elliott's stake acquisition in the company.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
