European stock markets opened the week with modest gains on Monday, drawing momentum from a powerful rally in Chinese equities, even as traders braced for a historically challenging month for Wall Street.
The positive sentiment was largely imported from Asia, where Hong Kong’s Hang Seng Index closed with a robust gain of 2.2 per cent. This surge was overwhelmingly fueled by Chinese e-commerce titan Alibaba, whose share price skyrocketed almost 20 per cent following the release of its bumper financial results, which highlighted a significant surge in revenue from its artificial intelligence ventures.
Further supporting Chinese equities was the release of official economic data indicating a slight improvement in the country’s factory output for August. The closely watched Purchasing Managers’ Index (PMI) inched up to 49.4 from 49.3 in July. However, analysts noted this still represents a fifth consecutive month of contraction, as any figure below the 50-point mark indicates a decline in industrial activity.
In Europe, the London FTSE 100 and Frankfurt DAX indices both posted gains approaching the halfway stage of the trading session. In contrast, the Paris CAC 40 was flat, weighed down by ongoing political turmoil in France surrounding contested budget proposals. With Wall Street closed for the Labor Day holiday, the dollar traded mixed against its main rival currencies.
Market analysts pointed to the traditionally weak performance of stocks in September. Kathleen Brooks, research director at XTB trading group, noted, “Stocks tend to underperform this month on both sides of the Atlantic.” She added that the tide had already begun to turn at the end of the previous week, citing “an underwhelming set of results for (AI chip giant) Nvidia, along with a sharp selloff in stock markets in Europe and the US.”
This cautious outlook follows a retreat on Wall Street from record highs on Friday. The pullback was triggered by a key US inflation reading that accelerated, thereby lowering market expectations for sustained interest rate cuts by the Federal Reserve in the coming months. In a separate development with significant implications for global trade, a US appeals court ruled on Friday that many of the tariffs imposed by former President Donald Trump were illegal. However, the court allowed the tariffs to remain in place for the time being, providing the administration an opportunity to appeal the decision to the Supreme Court.
In commodity markets, oil prices climbed, with Brent North Sea Crude and West Texas Intermediate both rising by 0.8 and 0.9 per cent, respectively. Currency markets saw the euro and pound both gain slightly against the dollar.
