European equities ended the week on the defensive, with sentiment turning more cautious as sovereign debt worries resurfaced.
Early in the week, the tone was constructive. Analysts flagged European luxury valuations at decade lows and argued high-quality franchises were being unduly penalised. A separate note made the case for European banks over US peers, citing a steeper yield curve and cheaper multiples. Researchers also pointed to a 2027 cyclical rebound led by France, alongside bullish single-name takes on Schneider Electric (electrification), Adyen (payments moat under-appreciated), and Siemens Healthineers on technicals.
By mid-week the mood shifted. Multiple strands of research turned more cautious, framing a "pivot day" for Europe as the Euro Stoxx 600 tested its 200-day moving average and sovereign spreads widened. Later commentary argued the subsequent bounce was premature given unresolved stress in French and Italian debt, with some flagging downside hedges on European bank exposure and warning that record-high indices including the DAX look vulnerable to a sharp reversal.
Bright spots held in German defence and Dutch industrials, where PMIs and AI/defence capex were cited as durable tailwinds.