European stocks opened strongly on Monday, gaining nearly 1%, led by a significant rebound in the banking and defense sectors.
The main STOXX 600 index for Europe rose by 0.9%. Banks, which had suffered a 2.5% drop on Friday due to concerns about loan problems at US regional lenders, saw a strong bounce back, rising 1.6%. Similarly, the aerospace and defense sector climbed 2.1%, recovering from a fall triggered by news of a planned peace summit for the war in Ukraine.
In company news:
- Gucci owner Kering jumped 4.2% after agreeing to sell its beauty business to L’Oreal.
- Cement maker Holcim rose 1.4% after announcing it would acquire German company Xella.
- Swedish defense firm Saab gained 3.1% after securing a contract for artillery radar in Spain.
- However, French car parts supplier Forvia lost 6% after reporting a drop in its third-quarter sales.
The positive market sentiment occurred despite data showing that German producer prices (a measure of wholesale inflation) fell more than expected in September.
On the FX front, the Australian dollar rose on Monday, boosted by positive signals from its top trading partner, China.
The Japanese yen initially weakened against the dollar, which climbed as much as 0.4% to 151.20, because investors were confident that pro-stimulus candidate Sanae Takaichi would become Japan’s next prime minister after securing key political support.
However, this weakness quickly faded after a central bank official, Hajime Takata, reiterated his call to raise interest rates, which strengthened the yen.
Elsewhere, the Australian dollar gained 0.3%, the euro saw a small gain of 0.1%, while the British pound edged down 0.1%.
China’s currency, the yuan, remained largely unchanged.
Currency Power Balance