European stock markets have continued to rise, the easing of macroeconomic pressures has boosted risk appetite
Risk appetite has been buoyed by the easing of macro-economic pressures. Oil prices have fallen, bond yields are down and market sentiment has lifted. Tourism and healthcare sectors have done particularly well.
The index has been steadily rising, and market risk appetite has improved.
European stocks have generally shown an upward trend. The STOXX 600 index across Europe closed up by 0.5%. Although some of the early gains narrowed, this was the third consecutive trading day of gains for the index. Most industry sectors recorded gains during the trading session. Market sentiment shifted from cautious to optimistic. The index opened higher in the morning and maintained a range-bound movement at a high level.
Money that was flowing out has begun to flow back into the stock market. Investors' concerns about the economic outlook in Europe have eased. The improvement in risk appetite has driven the upward movement of the broad market index. The large caps have done well and the small caps have done well.
Yields and oil prices fell.
The stock market got a strong hand from the cooling bond market. Euro zone bond yields have climbed to recent highs. The previous selling spree triggered by fiscal and inflation concerns has subsided. The decline in borrowing costs directly reduced the financial burden on enterprises. This improved the profit expectations of listed companies. Funds reassessed the attractiveness of stock assets.
The decline in crude oil prices also boosted market sentiment. Higher crude‑oil exports out of the Middle East have eased tight supply conditions. Oil prices dropped by 2%, which brought down business operating costs in real terms. Reduced inflationary pressure is conducive to stock market growth.
The tourism and healthcare sectors led the gains.
The overall increase in the tourism sector reached 1.4%. The decline in oil prices and the recovery in travel demand jointly drove the strength of this sector. A large amount of funds poured into related stocks. Many stocks within the sector reached their recent highs. Market confidence in the recovery of consumption was fully verified on the market surface.
The healthcare sector as a whole rose by 0.6%, but the internal stocks showed large differentiation. Genmab's stock climbed 4.4%. The results of its late-stage lymphoma research helped the stock reach a new high in three years. Zealand Pharma dropped by 5.5%. The progress of research and development became the core driving force for the trend of pharmaceutical stocks.
The expectation of interest rate cuts has intensified, and the banking sector has seen a recovery.
The large bank stocks performed strongly, and the sector as a whole rose by 1.1%. The market's expectation of the European Central Bank raising interest rates has cooled down. Previously, the market expected a large increase in interest rates. Now, the expectation has been adjusted to only one interest rate hike. The expectation of interest rate peaks has alleviated concerns about the deterioration of bank asset quality.
The restrictive effect of high interest rates on the real economy has begun to manifest. The financing costs of enterprises and mortgage holders remain high. The government's interest burden is also increasing. These have caused investors to reassess the course of monetary policy. Bank stocks, as interest rate-sensitive assets, have seen a valuation recovery after the expectation of interest rate hikes cooled down.
French debt and political uncertainty.
The high debt burden and political deadlock in France continue to weigh on the performance of the euro. The euro exchange rate has been consolidating near its 17-month low. Adding to the political uncertainty is Spain's decision to call an early general election. The yield spread between French and German bonds has narrowed from its peak and market concerns about the risk premium in France have eased slightly. The recent trend is more related to position adjustments.
Some stocks have received investor favor.
The Italian technology company Technoprobe rose by 2.8% after the opening. JPMorgan Chase initiated coverage on it and gave it an overweight rating. The endorsement from major banks increased the market attention on this stock. Funds quickly followed and bought it, driving the stock price to rise rapidly. The Spanish real estate developer Neinor Homes' stock price rose by 5%. The company raised its performance expectations for the next two years and also announced long-term goals for 2028.