European Stocks Rise as Markets Shake Off U.S. Banking Fears and Focus on Earnings

European stocks started the week on a positive note, brushing off recent worries about bad loans in the U.S. banking sector. The pan-European Stoxx 600 index climbed 0.8% by 8:30 a.m. in London, recovering from a nearly 1% drop on Friday. Investor sentiment brightened as focus shifted to upcoming corporate earnings and global economic data after a turbulent week on Wall Street.

Across the continent, markets showed solid gains. London’s FTSE 100 rose 0.5%, Germany’s DAX jumped 1.1%, France’s CAC 40 added 0.7%, and Italy’s FTSE MIB surged around 1.4%. The gains reflect renewed investor optimism, as European equities continue to demonstrate resilience despite mixed signals from global markets. Analysts say the rally suggests investors are betting that Europe’s banking sector remains fundamentally stronger than its U.S. counterpart.

Luxury giant Kering led early gains, climbing about 4% after announcing the sale of its beauty and fragrance business to L’Oréal for €4 billion ($4.7 billion). The deal, aimed at reducing Kering’s €9.5 billion debt, precedes key earnings reports from both companies this week. Meanwhile, defense stocks surged as geopolitical tensions remained high — Renk, Hensoldt, and Rheinmetall gained between 5% and 7% following reports of another tense exchange between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy over the weekend.

Banking stocks also rallied, with the Stoxx Europe 600 Banks Index up 1.6%. BPER Banca and Banco Sabadell gained around 4% each as optimism returned to the sector. “European banks are up 40% this year, and expectations are high,” said Christian Edelmann, managing partner for Europe at Oliver Wyman, in an interview with CNBC. He noted that while U.S. lenders such as Zions and Western Alliance have reported loan issues, European financial institutions have so far delivered “solid results with no negative surprises.” In industrials, Holcim rose 0.8% after agreeing to buy Germany’s Xella for €1.85 billion, expanding its building materials portfolio.

Looking ahead, investors are bracing for a busy week of corporate results. SAP, Barclays, Heineken, and Svenska Handelsbanken will report midweek, followed by Roche, Unilever, and Lloyds Banking Group on Thursday. Across the Atlantic, Netflix, Coca-Cola, Tesla, and Intel are among major U.S. firms set to report, alongside key inflation data due Friday. Meanwhile, Asia-Pacific markets traded higher after China’s GDP rose 4.8% year-on-year in the third quarter, matching forecasts. With global earnings season heating up, traders are cautiously optimistic that growth and corporate profits will stabilize markets in the weeks ahead.

source: cnbc