European stocks rise ahead of ECB decision as earnings support sentiment

European stocks advanced on Thursday, October 29, supported by gains in German and French equities as investors assessed corporate earnings and awaited the European Central Bank's interest rate decision.

The recovery followed Wednesday's modest gains, with banking and technology shares attracting renewed interest despite persistent concerns over inflation and higher borrowing costs.

Price overview

Germany's DAX rose 1.15% to 25,992.38 points while France's CAC 40 gained 1.09% to 7,972.87 points.

Britain's FTSE 100 advanced 0.37% to 10,734.06 points. while the Euro Stoxx 50 increased 0.39% to 6,192.15 points.

Spain's IBEX 35 declined 0.69% to 18,752.78 points.

ECB decision in focus

The European Central Bank is expected to leave interest rates unchanged when it announces its decision at 13:15 GMT.

Investors will examine President Christine Lagarde's comments for indications of whether policymakers are considering further tightening as elevated energy prices threaten to prolong inflation.

Concerns over French government finances and sovereign bond yields have also complicated the monetary policy outlook.

Corporate earnings drive gains

European markets continued to respond to a busy earnings season, with financial institutions and industrial companies drawing particular attention.

Bank shares have benefited from resilient profitability, although investors remain concerned about the consequences of prolonged high interest rates for lending activity.

Technology stocks also received support from renewed optimism surrounding artificial intelligence investment.

Fed decision shapes sentiment

The Federal Reserve maintained interest rates at 3.75%–4.00% on Wednesday, leaving the possibility of another increase in December open.

The prospect of continued US monetary tightening has supported the dollar and kept global bond yields elevated.

Market outlook

European equities face a crucial test from the ECB's announcement and upcoming US inflation figures.

A cautious ECB could help sustain the recovery, while signals of additional tightening may renew pressure on equities, particularly rate-sensitive sectors.