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Positive Start for European Stocks

European markets appear set to open on a firmer footing this week, rebounding after last week’s sell-off triggered by renewed concerns about bad loans in the U.S. banking sector.

According to data from IG, early projections show Britain’s FTSE 100 up 0.32%, Germany’s DAX up 0.67%, France’s CAC 40 rising 0.62%, and Italy’s FTSE MIB climbing 0.65% when markets open on Monday.

The rebound follows a rough Friday session when the pan-European Stoxx 600 dropped 0.95%, ending a week marked by fears of contagion from U.S. regional banks.

Wall Street Worries and Europe’s Resilience

Investor sentiment was shaken last week after Zions Bancorporation and Western Alliance Bank disclosed exposure to bad loans, sparking a sell-off in U.S. financials. However, by Friday, many bank stocks had staged a modest recovery.

Christian Edelmann, Managing Partner for Europe at Oliver Wyman, told CNBC that while the “credit jitters” originated in the U.S., European banks remain on much stronger footing.

“European banks are up 40% this year, and that reflects a high level of confidence in their fundamentals,” Edelmann said. “So far, the results from European lenders have shown no negative surprises.”

Indeed, analysts point to stronger capital buffers, diversified income streams, and tighter regulatory oversight as reasons why European lenders have weathered global credit volatility better than their U.S. peers.

A Light Start to the Week Before Earnings Surge

Monday is expected to be relatively quiet on the earnings front, with Swedish engineering group Sandvik being the only major firm scheduled to release results.

The rest of the week, however, will see a packed corporate earnings calendar. L’Oréal will report on Tuesday, followed by heavyweights such as SAP, Barclays, Heineken, and Svenska Handelsbanken on Wednesday. On Thursday, investors will hear from Kering, Roche, Unilever, and Lloyds Banking Group.

In a notable development, Kering announced on Sunday that it will sell its beauty and fragrance division to L’Oréal for €4 billion ($4.66 billion), signaling a strategic shift for both French giants ahead of their respective earnings announcements.

Focus Shifts to the U.S. and Global Data

Across the Atlantic, U.S. stock futures rose overnight as investors looked ahead to a heavy week of earnings and inflation data. Tech titans like Netflix, Tesla, and Intel, along with consumer giants like Coca-Cola, are expected to release results this week.

All eyes are also on the upcoming September Consumer Price Index (CPI) report due Friday, which will give investors fresh insight into inflation trends. Economists anticipate inflation to remain elevated, maintaining pressure on the Federal Reserve’s monetary stance.

The release is particularly significant amid the ongoing U.S. government data blackout caused by the federal shutdown, which has left investors relying on fewer official indicators.

Asia-Pacific Markets Lift Sentiment

Asian markets started the week positively, adding to the upbeat tone in Europe. Investors welcomed new Chinese GDP figures showing 4.8% year-on-year growth for the July-to-September quarter — in line with expectations from analysts polled by Reuters.

China’s steady growth helped lift regional sentiment, with major indexes in Japan, South Korea, and Australia all closing higher. The performance in Asia is expected to lend further support to European equities in Monday’s session.

Outlook: Cautious Optimism Amid Volatility

While European markets are poised for a positive start, analysts caution that volatility could return if credit concerns in the U.S. resurface or if inflation data disappoints later in the week.

Still, with strong corporate results expected and global growth indicators stabilizing, many investors see opportunities for steady gains in European equities after last week’s dip.

In short, the new trading week begins with a mix of renewed confidence and cautious watchfulness, as Europe’s markets look to shake off Wall Street’s credit cloud and focus on their own fundamentals.