European shares rose at the start of the week as investors geared up for a week packed with significant economic data releases and earnings reports from major U.S. firms. The STOXX 600, representing pan-European stocks, saw a rise of 0.4%, landing at 520.84 points, following its first weekly loss in three weeks last Friday. However, the energy sector faced a downturn, with a 2% fall, driven by a 5% tumble in oil prices after Iran downplayed the recent Israeli airstrikes.
In contrast, the travel and leisure sector, including airlines, rose by 1%, benefiting from the oil price drop. With fuel as a substantial expense for airlines, lower oil prices often translate to healthier profit margins. The luxury sector also performed well, with stocks rising over 1.3%. Meanwhile, Philips, the Dutch medical devices company, suffered a steep 16.7% drop after lowering its yearly sales forecast. This decline affected the healthcare sector, which ticked down by 0.3%.
Throughout the week, several key data points are expected to impact European markets. European Central Bank Vice President Luis de Guindos is scheduled to give a speech, and Sweden’s preliminary GDP figures and retail sales for September are due for release on Tuesday. Midweek, the euro zone will release its flash GDP, consumer confidence, and economic sentiment data, while Germany will share figures on consumer prices, GDP, and employment. Other significant data releases include GDP estimates from Spain and Italy, the British budget, and CPI data for the euro zone, France, and Italy.
Expectations are cautiously optimistic for the euro zone, with Elias Haddad, a senior markets strategist at Brown Brothers Harriman, noting that the mix of slow growth and easing inflation could prompt the ECB to take further action on their monetary easing efforts. Global market sentiment is also set to be influenced by earnings from five of the “Magnificent Seven” U.S. megacap tech companies, with Alphabet, Microsoft, Meta, Apple, and Amazon all scheduled to release their quarterly results later this week. Additionally, the upcoming U.S. Presidential election remains on investors’ minds, especially as recent polls show a narrow lead for Vice President Kamala Harris over Donald Trump.
