London / Frankfurt — European equities delivered a powerhouse performance this Monday, February 2, with the FTSE 100 and Ibex 35 reaching unprecedented historical levels. Despite lackluster PMI data suggesting a lingering contraction in the Eurozone’s manufacturing sector, markets are choosing to focus on the upcoming quarterly results from banking titans like UBS and BNP Paribas.
The narrative is clear: while the factory floor struggles, the financial floor is thriving on the interest margins sustained by the current monetary policy.
The Strategy of the Pause The market’s resilience is built on the expectation that both the European Central Bank (ECB) and the Bank of England (BoE) will maintain interest rates in their meetings this Thursday.
This “monetary truce” provides a stable backdrop for corporate buybacks and mergers, such as the failed bid for Beazley by Zurich Insurance, which underscored the high valuations currently placed on British financial assets.
As energy prices fall due to the “Trump-Iran” diplomatic signals, the inflationary pressure on European households eases slightly, potentially averting a deeper recession and justifying the bullish sentiment in Paris and Frankfurt.
