Europe's STOXX 600 ends higher as bank stocks cushion oil price hit
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…
European markets began the week on a positive note as the STOXX 600 index rose 0.65% to 635.65 points, marking its second consecutive day of gains. The surge in bank shares played a significant role in offsetting the impact of higher oil prices on the pan-European benchmark. Investors are now focusing on corporate earnings this week, with strong results expected to dispel any gloom following renewed tensions in the Middle East.
However, France's LVMH reported weaker-than-expected third-quarter organic sales growth, with its shares closing 1.18% higher ahead of the report. The luxury sector also rose 0.95%, with luxury shares such as LVMH benefitting from the recent market rally. Semiconductor equipment maker ASML and investment firm EQT were set to report later in the week.
Analysts from Julius Baer noted that banking stocks could offer stronger value and return potential than their US counterparts. Spain's bank-heavy IBEX rose 1.33%, the highest among regional peers, while the STOXX 600 banking index advanced 1.5%. Oil prices hovered near two-week highs due to attacks on Saudi Arabia, overshadowing the expectation of increased supplies following US President Donald Trump's support for Russian diesel exports and a Russia-Ukraine ceasefire covering energy targets.
Analysts at Trade Nation advised market participants to keep an eye on third-quarter earnings, particularly from semiconductor companies and other AI beneficiaries, as they could shape near-term market sentiment. Euro zone bond yields eased on Monday, further boosting sentiment for riskier assets, although they remain near multi-year highs, reflecting concerns about longer-lasting higher interest rates.
Traders expect the European Central Bank to maintain rates at its October meeting, with expectations of a quarter-point rate increase in December, according to LSEG-compiled data. Nonetheless, the lack of robust economic growth in the euro area dampens the prospects for further ECB tightening. Among other notable moves, Nordex surged 3.9% after reporting a 30% year-on-year rise in project orders, while French steel tube maker Vallourec gained 3.8% following the acquisition of an Azerbaijani gas field by TotalEnergies. Telecom stocks, however, lagged, falling 0.54%.
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