LONDON — European stocks were in positive territory on Monday morning after a volatile few days in which investors weighed concerns over bad loans on Wall Street.
The pan-European Stoxx 60 was up about 0.8% at 8:30 a.m. in London (3:30 a.m. ET), having closed Friday down 0.95% as concerns over the U.S. banking sector hit European sentiment.
The U.K.’s FTSE index was up 0.5% higher in early trading Monday, Germany’s DAX rose 1.1%, France’s CAC 40 added 0.7%, and Italy’s FTSE MIB was 1.4.3% higher.
Kering advanced about 4%, after the Gucci owner said on Sunday it is selling its beauty and fragrance business to L’Oreal for 4 billion euros ($4.7 billion). The sale – which is aimed at cutting Kering’s debt, which was around 9.5 billion euros as of the end of June — comes ahead of L’Oreal’s earnings report on Tuesday, followed a day later by Kering’s results.
Europe’s defense stocks were among the strong early movers, with Renk gaining 7.3%, Hensoldt up 5.6% and Rheinmetall rising 4.7%, after U.S. President Donald Trump had another tense meeting with Volodymyr Zelenskyy over the weekend regarding Ukraine’s territory.
Meanwhile, Europe’s banks were in positive territory, with Stoxx Europe 600 Banks Index adding 1.6%. Notching the strongest gains were BPER Banca, up 4%, while Banco Sabadell added 4.4%.
“European banks are up 40% this year … and hence there is a high level of expectations in the market,” Christian Edelmann, managing partner for Europe at Oliver Wyman, told CNBC’s “Europe Early Edition” on Monday.
Last week, U.S. lenders Zions and Western Alliance disclosed issues tied to bad loans, leading shares of several financial heavyweights and regional banks lower, before they rebounded on Friday.
Edelmann said: “The credit jitters are really more in the U.S. around the defaults that we’ve seen around two banks that have reported so far. When you look at European reporting — and yes, you just said most of it is coming this week and later — results were pretty solid; no negative surprises on the European banks so far.”
Elsewhere, Swiss building materials company Holcim gained 0.8% after the company — which is one of the world’s largest cement makers — agreed to buy Germany’s Xella, which manufactures walling systems, for 1.85 billion euros ($2.2 billion).
It’s a quieter day for earnings and data releases in Europe on Monday, with Swedish engineering firm Sandvik the only major company set to report financial results.
We’ll be getting more earnings as the week goes on, with SAP, Barclays, Heineken and Svenska Handelsbanken among the companies reporting on Wednesday. The next day Roche, Unilever and Lloyds Banking Group will be reporting earnings.
Overnight, U.S. stock futures moved higher as investors turned their attention toward a slew of big-name earnings reports and inflation data expected in the coming days.
Netflix, Coca-Cola, Tesla and Intel are among the names set to report stateside this week, while the September consumer price index is also set for release on Friday and is expected to show that inflation remains hot.
Traders will be paying special attention to the report, given the ongoing data blackout caused by the U.S. government shutdown.
Elsewhere, Asia-Pacific markets traded higher overnight as investors assessed China’s latest growth data which showed GDP rose 4.8% in the July-to-September period compared to a year ago. That was in line with expectations of analysts polled by Reuters.
— CNBC’s Pia Singh and Lee Ying Shan contributed to this market report.
