European Shares Post Best Week Since April on Healthcare and Bank Strength

European markets closed their strongest week in five months on Friday, with banks, healthcare, and miners leading the gains. Investor optimism was boosted by rising bets on a Federal Reserve rate cut, lifting overall sentiment across the continent.

STOXX 600 Hits Record Highs

The pan-European STOXX 600 index ended the session up 0.5%, marking a record high for the third day in a row. For the week, the index gained 2.8%. It also reached new intraday records earlier this week.

Healthcare Stocks Lead the Rally

Healthcare shares were the top performers, climbing 1.3%. AstraZeneca rose 1.6%, while Novo Nordisk jumped 2.1%. The sector outpaced peers after a U.S. Pfizer drug pricing deal reduced uncertainty.
UBS Global Wealth Management noted that while the deal was not a full guarantee, it provided a short-term boost and reinforced the sector’s long-term growth drivers.

Banking Stocks Climb Higher

Banks also lifted the market, with a 1% gain. Raiffeisen Bank soared 7.4% after the Financial Times reported that the European Union may lift sanctions on assets tied to Russian oligarch Oleg Deripaska to compensate the Austrian bank.
Meanwhile, ABN Amro rose 2.7% after Goldman Sachs upgraded the Dutch lender to a “buy” rating from “sell.”

Miners and Basic Resources Advance

The Basic Resources sector gained 1.7%, reflecting stronger base metal prices. Europe’s largest mining firms followed the upward trend.

Fed Policy and Market Outlook

With the U.S. government in shutdown, a key U.S. jobs report was delayed. Still, markets are focused on the Federal Reserve, where bets on a near-term rate cut have surged. According to the CME FedWatch Tool, traders see a near-certain chance of a cut later this month.

“Markets appear to be looking past the U.S. government shutdown and are focusing instead on Fed policy expectations,” said Fiona Cincotta, senior market analyst at City Index.

Euro Zone Services Growth

In Europe, growth in the euro zone services sector accelerated to an eight-month high in September. Germany also recorded its fastest growth in the sector in eight months. However, France’s services sector contracted more than expected, while the UK saw its weakest business activity in five months.

Other Market Movers

Among individual stocks, Belgian investment firm Sofina dropped 3.2% after announcing a €545 million ($640 million) rights issue, making it one of the weakest performers on the STOXX 600.