European Stocks Rise for 3rd Session

European stocks moved higher on Wednesday, with the STOXX 50 rising 0.5% and the STOXX 600 gaining 0.4%, extending their advance for a third consecutive session. The continued decline in oil prices remained a key driver of sentiment, offering further relief on inflationary pressures. Oil prices fell for a sixth straight day amid growing signs that a potential agreement between the US and Iran could help end the war and facilitate the reopening of the Strait of Hormuz. Meanwhile, flash services PMIs for the Euro Area, Germany and France came in way better-than-expected. The banking sector was higher, including HSBC (1%), BBVA (0.6%), Unicredit (1%) and BNP Paribas (1%). The luxury sector also traded in the green, including LVMH (1.3%), Hermes (0.9%) and Richemont (0.9%). Other notable gainers include SAP (1.8%). On the other hand, the telecommunication sector was under pressure, with Telefonica (-1.2%), Orange (-1.8%) and Vodafone (-1.8%) trading lower.

European equity markets were set to open higher on Wednesday as oil prices extended their decline on signs of progress in renewed US-Iran talks, easing concerns over higher inflation and interest rates. President Donald Trump said US officials had a “very good” meeting with Iranian envoys, while Tehran said it could reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade of Iranian ports. Sentiment was also supported by optimism surrounding Thursday’s upcoming US-China summit, which could produce new trade agreements, as well as a rally in technology stocks fueled by renewed interest in the AI trade. In Europe, investors will assess September manufacturing activity data from the Eurozone, Germany, France and the UK, while no major earnings reports are scheduled. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both up around 0.3%.

European stocks closed slightly higher on Tuesday, extending the sharp gains from the previous session with support from the tech sector and consumer staple companies. The Euro STOXX 50 rose 0.2% to 6,332 and the STOXX Europe 600 added 0.3% to 643.6. Companies in the AI space rose sharply, tracking similar movements in North America after positive reviews on Meta's Muse AI agent reignited long positions on electronic commerce and AI infrastructure. ASML, Infineon, and Siemens Energy gained up to 2.5% to set the pace on the hardware side, while Prosus jumped 4.6% on bullish applications sentiment. Further, Inditex added 3% on recommendation upgrades from brokers. In turn, banks and insurers pared yesterday's gains as sovereign yields in the Eurozone rebounded, tracking the afternoon increase in natural gas prices following escalatory rhetoric from US President Trump regarding Tehran. Allianz fell 3.4%, AXA dropped 2%, and ING and Deutsche Bank fell 1.5%.