European shares rise as oil falls on Middle East deal hopes
Lower oil prices propped up the travel and leisure sector
European shares began the week on an upward trajectory on Monday, November 2, as investors anticipated progress in negotiations to end the conflict between the United States and Israel with Iran. This optimism led to a drop in oil prices and increased risk-taking in the market. The pan-European Stoxx 600 index finished the day up by 0.42 percent at 649.44 points, nearing a two-month high. Spain’s IBEX led regional bourses higher, gaining 1.63 percent.
Brent crude oil prices fell by more than 7 percent following three days of discussions between Iranian and Qatari officials. Richard Flax, chief investment officer at Moneyfarm, noted that the market reaction was partly due to hopes of a de-escalation in the Middle East. The travel and leisure sector benefited from the lower oil prices, rising by 3 percent, its steepest one-day gain since June. Energy stocks, however, declined by 2.3 percent, leading the Stoxx index declines.
The travel and leisure sector's strong performance was driven by a 6 percent fall in net profit for Ryanair, which announced cost cuts, and a 5.2 percent rise in shares. In contrast, energy stocks fell 2.3 percent, negatively impacting the Stoxx 600 index. The healthcare sector also performed exceptionally well, logging its steepest monthly gain of 14 percent since February 1987.
This surge was fueled by tailwinds such as the selloff in tech stocks, which made healthcare a more attractive defensive sector, and positive earnings news.
Notably, Bavarian Nordic experienced a rise of 2.4 percent after securing a four-year contract from the British government for its vaccine against mpox and smallpox, and announced plans for share buybacks. Chip stocks Aixtron and Infineon also gained 3.9 percent and 2.9 percent, respectively, recovering from a tech sector selloff following disappointing results from US-based hyperscalers.
However, not all sectors fared well. Alstom saw its shares drop by 26 percent, marking its lowest level since March 2024. The company cited execution problems on its Coradia Max platform in Germany, which hurt half-year profitability, and warned of negative free cash flow for the year. The broader European manufacturing sector also grew in October, albeit at a slower pace than initially anticipated.
Rising costs from energy and supply-chain disruptions strained margins, showing a more cautious outlook for the economic sector.
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.
