European stock markets remained steady on Monday as a surge in Chinese technology stocks lifted investor sentiment, while European long-dated bonds came under heavy pressure. The latest trading reports showed that the broader STOXX 600 index in Europe gained 0.1 per cent, reflecting mixed signals from global markets.
The slight increase in the European index was initially supported by stronger manufacturing data, though that momentum later slowed as investors weighed fiscal concerns across major economies. Market watchers said the early boost highlighted optimism in production activity, but the cautious close showed that traders remained alert to risks from rising bond yields and political uncertainty.
In Asia, Chinese technology stocks provided the biggest lift to investor confidence. Shares of e-commerce and cloud giant Alibaba Group Holding Limited soared by 18.5 per cent in Hong Kong trading after reports that artificial intelligence adoption significantly boosted revenue for its cloud services. Analysts said the news signaled fresh growth potential for Chinese firms at a time when the country is seeking to recover from a prolonged slowdown in property and export markets.
Meanwhile, in the United States, share futures edged higher as traders positioned for a busy week of economic data releases. Key updates expected include manufacturing and services surveys, labour market reports, and the widely followed August payrolls report scheduled for Friday. Economists believe the U.S. Federal Reserve will closely study the employment figures, as any shift in job creation or wage growth could determine whether the central bank maintains or adjusts its stance on interest rates.
Bond markets in Europe faced heavy pressure as yields rose sharply. German 30-year bond yields climbed to 3.38 per cent, their highest level in 14 years. Similarly, benchmark 10-year bond yields rose by three basis points to 2.76 per cent. The spike in borrowing costs was attributed to wider global fiscal worries, including concerns about government spending levels and the potential impact on debt sustainability.
The euro strengthened by 0.25 per cent to $1.1711 on Monday, supported by the higher bond yields, which tend to attract foreign investors into European assets. At the same time, gold prices climbed to a four-month high of $3,489.5 an ounce, as investors sought safe-haven assets amid uncertainty. Oil markets also recorded modest gains, with prices edging higher due to supply disruptions linked to the ongoing Russia-Ukraine conflict and renewed concerns about tariffs in the United States.
Political developments in France also kept investors cautious. Prime Minister Francois Bayrou was scheduled to hold discussions with various political parties ahead of a crucial confidence vote set for next week. The vote has created some tension in European markets, as political instability in one of the region’s largest economies could affect investor confidence and economic policy direction.
Market analysts said the combination of rising bond yields, geopolitical tensions, and political uncertainty in Europe would likely continue to influence investor decisions in the coming days. While the rally in Chinese technology stocks and modest gains in U.S. futures showed positive momentum in certain areas, the broader outlook remained fragile.
Observers added that Europe’s manufacturing recovery and China’s renewed push in technology could provide some balance to the current market volatility. However, the rising cost of borrowing for European governments, along with political risks in France, Germany, and beyond, could keep pressure on bond markets and currency movements.
Investors are expected to follow closely how the Federal Reserve reacts to the upcoming U.S. payrolls report, as any indication of interest rate cuts or prolonged higher rates could ripple through global markets. Similarly, commodity traders will be monitoring developments in oil supply disruptions and demand forecasts, which remain sensitive to global political and economic conditions.
Overall, Monday’s trading reflected a cautious but steady environment, with investors showing both optimism about new growth opportunities and concern over long-term risks.
