EUROPEAN EQUITY UPDATE: Sentiment higher after US-China trade talks; defensive sectors hit

STOXX 600: +0.1%

• European equities trade mixed having opened on the firmer side. Positive trade negotiations between the US and China after Treasury Secretary Bessent said China is ready to make a deal, whilst Chinese top trade negotiator Li said they reached a consensus with the US and talked about tariffs, have increased market sentiment in APAC with tailwind from Asia also flowing into European bourses this opening, leading to the largely positive opening.


• CAC 40 has seen some downside due reports suggesting French lawmakers are refraining from voting on a Socialist proposal for a wealth tax on Saturday, delaying a possible compromise in a budget debate, dampening confidence in French assets. Whilst the FTSE 100 has faced downward pressure from losses in its heavyweight defensive Healthcare sectors due to broader sentiment.


• Data this morning included German Ifo with expectations and business climate beating the expected forecast, though the current condition was just marginally below the expected forecast - no major move seen on the data.


• Looking ahead: Speakers remain sparse amid the ECB blackout, with the meeting announcement on Thursday - consensus expects the ECB to hold rates steady.


• Note: UK clocks moved back an hour during the weekend and reverted to GMT, which means there will just be a 4-hour time difference between London and New York for the week ahead until US clocks change on Sunday 2nd November.

Sectors: Mixed/Negative

• European sectors have opened mixed, though more skewed towards the red. The biggest winners are Technology (+1.0%), Basic Resources (+0.6%) and Banks (+0.5%), which have gained momentum following newsflow from the US-China positive trade talks over the weekend. Basic resources are benefiting from rising copper prices, whilst sentiment around technology is underpinned after Trump announced the US may sign a final deal on TikTok on Thursday.


• At the bottom: Chemicals (-0.9%), Health Care (-0.8%) and Real Estate (-0.7%). Healthcare and Real Estate are subdued due to risk appetite from the US-China trade news, which has dampened demand for defensive sectors.

Movers:

• Porsche (+2.4%) - Sentiment remains high despite poor Q3 figures due to the company stating that there will be noticeable improvement from 2025 onwards.


• Barclays (+1.4%) - Shares are higher, lifting the banking sector after Co. announces plans to re-enter Saudi Arabia after leaving the business in the country in 2014.


• UniCredit (+1.2%) - EU Commissioner for Financial Services highlighted challenges to the creation of larger European banks when asked about Germany pushing back on Co.’s attempt to take over Commerzbank (+0.5%)


• Roche (-2.3%) – Shares are down, pulling down the healthcare sector after being downgraded to underperform from hold at Jefferies.

US Equity Futures:

• US equity futures are firmer with upsides in NS (+1.2%), ES (+0.8%), Dow (+0.5%), and Russell (+0.1%).


• Sentiment remains high in US equities following positive trade news from the US-China-Malaysia meeting this weekend. Key details include US President Trump announcing that they might sign a final deal on TikTok on Thursday, having received provisional approval from President Xi, and underpinning sentiment for NQ.


• Treasury Secretary Bessent also announced that the tariff increase on China was averted and that he expects Chinese purchases of US soybeans soon.


• Speakers remain light ahead of the FOMC announcement on Wednesday, where the meeting is expected to deliver a 25bps rate cut to 3.75-4.00%, with a further reduction anticipated in December, according to a Reuters poll. Money markets are fully pricing a 25bps cut and are pricing a very high chance of a December reduction.

27 Oct 2025 - 09:55- ForexGeopolitical- Source: Newsquawk