European equities closed the week on a positive note, with the STOXX 600 index inching up 0.2% to 569.02 points. This modest gain came at the end of a turbulent week marked by concerns over tech stock valuations, a looming U.S. government shutdown, and hawkish Federal Reserve commentary.

Market Performance

Despite the day's gains, the STOXX 600 remains on track for its most significant two-week decline since early September, reflecting the ongoing market volatility.

Corporate Highlights

ITV's Potential Deal

The day's standout performer was ITV, whose shares surged by an impressive 18.2%. This jump came after the company announced it was in discussions with Sky, owned by Comcast, regarding a potential sale of its media and entertainment unit. The deal, if materialized, could be worth 1.6 billion pounds ($2.15 billion), including debt.

Sector Performance

The media sector led the day's gains, rising 1%, buoyed by ITV's news.

Other Notable Movements

• Rightmove: The property portal saw its shares plummet 24% following a forecast of slower profit growth in 2026, attributed to planned investments in artificial intelligence.
• Monte dei Paschi di Siena: The Italian bank's shares climbed 4.5% after reporting an unexpected increase in third-quarter profit.

Market Overview

The European market's modest gains come against a backdrop of broader economic concerns, including a potential U.S. government shutdown and recent Federal Reserve commentary. These factors have contributed to the volatility seen in recent weeks, with the STOXX 600 facing its largest two-week decline since early September.

The STOXX 600 index, a key benchmark for European equities, reached a new intraday record high, climbing 0.1% to 576.37 points. This uptick was primarily driven by growing optimism surrounding the potential easing of trade tensions between the United States and China.

US-China Trade Deal Prospects

President Trump has indicated that the two economic powerhouses may be close to reaching a trade deal. Expectations are high for a framework decision to potentially be announced during Trump's meeting with the Chinese leader in South Korea. This positive development has injected renewed confidence into the European markets.

Sector Performance

The optimism surrounding the potential trade deal has had a varied impact across different sectors:

The mining and technology sectors, which are particularly sensitive to US-China trade relations, both saw gains of 1.1%. Conversely, the utilities sector experienced a decline of 0.6%.

Federal Reserve Rate Decision

Investors are closely watching the Federal Reserve, with expectations of a potential 0.25 percentage point rate cut. This anticipation is supported by recent softer inflation data, which could provide the Fed with more room to maneuver in its monetary policy decisions.

Corporate News

In corporate developments:

• Novartis has agreed to acquire Avidity Biosciences for $12 billion. Despite this significant move, Novartis shares fell by 1%.
• HSBC saw its shares drop by 1.3% following the announcement of a $1.1 billion provision related to a loss in a Madoff lawsuit appeal.

These corporate events underscore the complex interplay between major business decisions and market reactions, even in a generally optimistic environment.

The record high of the STOXX 600 index reflects the current positive sentiment in European markets, largely fueled by potential improvements in global trade relations. However, investors should remain vigilant, as individual corporate performances and sector-specific trends continue to influence market dynamics.