European Stocks Advance on Monday

European stocks closed firmly higher on Monday with support from lower sovereign yields, easing ongoing pressures from an adverse macroeconomic backdrop. The Euro STOXX 50 gained 1.3% to 6,318 and the STOXX Europe 600 rose 1.0% to 642. Natural gas and fuel prices pulled back following the weekend amid signs that GCC nations are chasing diplomatic ways with Iran to restart tanker flows through the Persian Gulf. The drop in yields aided the outlook of credit and supported banks, with UniCredit, Nordea, and BBVA adding between 3.2% and 2%. Lower gas prices also supported power-heavy industrial giants, with Siemens and Schneider each adding more than 3%. Lastly, a global rally for the AI infrastructure sector supported Infineon with a 4.3% jump, while ASML added 2.5%. Nokia and Engie both gained as they were added to the Euro STOXX 50, replacing Wolters Kluwer and Volkswagen.

European stocks opened the week higher, with the STOXX 50 gaining 1.1% and the STOXX 600 rising 0.7%, as oil prices extended their declines for a fourth consecutive session, providing some relief on inflationary pressures. Sentiment was also supported by expectations surrounding this week’s summit between US President Trump and Chinese President Xi Jinping, with the US describing its talks with China ahead of the meeting as “very successful”. Investors were also digesting the results of state elections in Germany. The CDU recorded a very low vote share, adding further pressure on Chancellor Merz. The far-right AfD is leading in Mecklenburg-Western Pomerania while in Berlin, the Left emerged as the leading party.Technology stocks were among the strongest performers, with ASML Holding, Infineon and STMicroelectronics each gaining around 2.8%. Societe Generale rose approximately 3.6%, making it one of the top performers on the STOXX 600, after the bank raised its profitability target.

European equity markets were set for a higher open on Monday as oil prices fell for a fourth consecutive session on hopes for a diplomatic resolution to the Middle East conflict, helping ease inflation concerns. President Donald Trump said he would “probably” be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations General Assembly this week, where he may also meet with other Persian Gulf leaders. Investors were also monitoring ongoing US-China discussions ahead of a summit between Presidents Donald Trump and Xi Jinping later this week. In Europe, Germany is facing a serious political crisis, with embattled Chancellor Friedrich Merz vowing to remain in office and push forward with potentially difficult reforms in Europe’s largest economy. Meanwhile, no major economic data or corporate earnings releases are scheduled in Europe on Monday. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures gained 0.7% and 0.5%, respectively.