European stocks experienced a muted trading session on Thursday, with the pan-European STOXX 600 index gaining 0.2% to 646.96, recovering from a one-month low. This follows three consecutive sessions of losses as a global bond selloff began to ease. Investors are now looking to upcoming U.S. economic data for clues on the Federal Reserve’s next policy moves. Regional indexes showed mixed performance, with Germany's DAX up 0.1%, Spain's index up 0.5%, and France's CAC 40 dipping 0.1%.
Deutsche Telekom AG shares rose 1.7% after reports indicated that Elliott Investment Management had built a significant stake in the company. Elliott is also reportedly opposing any potential merger between Deutsche Telekom and its American subsidiary, T-Mobile US Inc. In other company news, French chip materials maker Soitec surged 10% to the top of the STOXX 600 after raising its revenue growth outlook for the second quarter of 2027 to 50% year-on-year, up from its previous forecast of 30%. Sofina also gained 3.6% after reporting growth in net asset value for the first half of 2026 and revealing SpaceX as its largest position in its top private fund holdings.
The broader market had been impacted by escalating oil prices, driven by the recent Iran war, which amplified inflation concerns and led to a global bond and stock selloff. Although oil prices eased, they remained above $90 a barrel, contributing to expectations of continued high interest rates. Ricardo Castillo, head of investments at Mirabaud Group, noted that current retail energy prices reinforce the belief that the European Central Bank will maintain high rates, despite slower economic growth. Traders are anticipating the ECB to raise borrowing costs to 2.5% next week, with two additional quarter-point hikes expected by mid-2027.
Attention is now shifting to Friday's U.S. non-farm payrolls report, which will offer further insights into the Federal Reserve's policy trajectory, especially following hawkish comments from Chair Kevin Warsh last week. Meanwhile, in the eurozone, growth in the dominant services industry slowed to a two-month low in August, though overall private sector activity remained steady due to broad-based demand. Bond yields in the eurozone dipped from multi-year highs, providing some relief to the market.
