European stocks eke out weekly gain as oil, yields ease; SpaceX spectrum deal hits telecoms
The pan-European Stoxx 600 closes 1% higher on Oct 9, wiping out its weekly fall
The Stoxx 600 index in Europe experienced a 1% increase on October 9th, reversing its weekly decline. This growth was driven by a decrease in oil prices and bond yields due to the hope of a de-escalation in the Middle East conflict. However, the telecom sector suffered as SpaceX acquired a nationwide low-band spectrum portfolio in the US, causing a significant impact on related stocks.
The Stoxx 600 index closed at 1% higher on Friday, ending its weekly losses. Following an increase in oil prices and bond yields on Thursday, investors sought refuge from high-risk assets. US President Donald Trump's announcement that the US would not attack Iran before the upcoming midterm elections on October 13th relieved some market concerns about potential inflation and aggressive monetary tightening.
Eurozone bond yields also decreased following their multi-decade highs, influenced by fiscal concerns in France ahead of the presidential election. Analysts from BofA Global Research stated that bond yields would likely only increase if rising rates negatively impacted growth momentum, financial stress emerged due to higher borrowing costs, or clear signs of inflation reduction appeared.
Despite the increase in French political and fiscal risks, European equities have not been significantly affected, supported by robust global growth and earnings upgrades from the AI investment boom. The European Union and China agreed to reduce Chinese exports of hybrid and plug-in hybrid vehicles to the EU, enhance EU access to China’s market, and ease Chinese licensing of rare-earth exports.
This agreement aims to improve bilateral trade relations. European automotive stocks saw a 1.5% gain, marking their largest daily increase in over three weeks. Most sectors within the Stoxx 600 index closed in the green, except for the telecom sector, which declined by 2.9% and hit an eight-month low. Major telecom companies affected by the SpaceX acquisition included Deutsche Telekom, which fell 7.9%, marking its steepest one-day loss in over three years.
Deutsche Telekom holds a 54% stake in T-Mobile US, a company that experienced a 12% decline in US afternoon trading. Additionally, Britain’s Vodafone and Spain’s Telefonica dropped over 4.5% each, while France’s Orange experienced a 2.5% decrease. Investors are now awaiting the third-quarter earnings season to evaluate how companies are performing amidst higher inflation and interest rates.
Analysts project that Stoxx 600 companies will achieve a 21% profit growth from a year earlier, with energy and basic material firms expected to provide the most significant contribution to this growth.
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.
