By Medha Singh
October 5 – European shares edged higher on Monday, while French equities slid to a six-month low on fiscal concerns and losses in Schneider Electric after the company acquired US software firm PTC.
Adding to political risks in the region, Spain’s Prime Minister Pedro Sanchez called a snap election for November 29.
The pan-European STOXX 600 gained 0.2% to 632.42 points by 0857 GMT, after hitting a four-month low last week as global bond yields surged on inflation, higher corporate bond issuances and worsening fiscal outlooks.
France’s CAC 40 fell 0.9%, while the euro hit a 17-month low on fears of a return of sovereign debt crisis dynamics in the euro zone.
“What we’re seeing in bond markets is obviously impacting the euro, but it’s also having a knock-on effect on the stock market because of the impact that it could have on earnings,” said Kathleen Brooks, research director at XTB.
France’s 2027 budget last week included politically contentious spending cuts and savings measures aimed at narrowing its deficit.
However, investors remain sceptical of the government’s ability to rein in its deficit ahead of 2027 elections, keeping the country’s benchmark 10-year bond yield near its highest level since 2008.
Spanish stocks rose 0.9% after Sanchez called a snap election for November 29, in a bid to strengthen his mandate after a fragmented parliament rejected the government’s key housing decrees last week amid widespread protests.
“There’s going to be a lot of political change over the next six to nine months in Europe. That could make it very, very hard to get fiscal deficits down,” said Brooks.
Among other regional indexes, British and Italian stocks rose 0.4% and 0.3%, respectively, while those in Germany were trading about flat.
Chemicals and telecoms led gains among European sectors, firming 1% and 0.9%, respectively.
Energy stocks dropped 0.9%, mirroring declines in oil prices as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations boosted supplies, offsetting concerns about further damage to Gulf oil infrastructure as the US-Israeli war on Iran drags on. [O/R]
Latest data showed euro zone business activity expanded at its fastest pace in nearly 3-1/2 years in September as demand remained strong despite inflation worries stemming from the Middle East war.
Among individual stocks, Schneider Electric slumped 9.1% as investors weighed the size of its largest-ever acquisition and the premium being paid for a software business facing AI-driven valuation pressure and uncertain growth prospects.
AkzoNobel rose 1.1% after it agreed to sell its Southeast Asian decorative paints business to Nippon Paint for $1.35 billion.
BT Group firmed about 2% after it acquired TalkTalk’s consumer and wholesale businesses out of administration, in a bid to rescue the broadband operator and protect 2.5 million customers from losing services.
(Reporting by Medha Singh in Bengaluru; Editing by Nivedita Bhattacharjee and Harikrishnan Nair)
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