European markets gain as weak US jobs report eases interest rate expectations

Equities gain across European bourses

European stock markets advanced across the continent on 2 October 2026, supported by positive sentiment from Wall Street. Investors responded to weaker than expected United States employment figures, which prompted market participants to expect that the Federal Reserve will hold interest rates steady at the upcoming policy meeting on 28 October. Germany's DAX led the regional bourses with a 1.25% advance in Frankfurt, while Paris rose 0.82%, Madrid gained 0.6%, and London added 0.5%. In the United States, the Dow Jones Industrial Average rose 0.6% and the tech-heavy Nasdaq added 1.2%. The pan-European Stoxx 600 climbed by more than half a percentage point, driven primarily by technology and industrial shares.

Technology and industrial shares drive Milan

In Milan, the FTSE MIB accelerated in the final half-hour of trading to close up 0.7% at 50,570 points, recovering from a midday dip to 50,217 points. Semiconductor companies and artificial intelligence suppliers registered strong gains following advances by American chipmakers Intel and AMD on the Nasdaq. Technoprobe gained 6.05% and STMicroelectronics rose 5.86%, while cable manufacturer Prysmian added 4.93% on data centre demand. Other European chipmakers also advanced, including BE Semiconductor with a 6.7% gain and Soitec up 5.3%. Automotive group Stellantis rose 2.6% on sustained vehicle sales, while cement producer Buzzi gained 2.74%. Energy infrastructure and utility shares in Milan also moved higher, with Enel rising 2%, Snam adding 1.66%, and Italgas gaining 1% as it expanded into Portugal. Oil producer Eni gained 0.75% despite lower crude prices, while shipbuilding group Fincantieri fell 3.88% and banking lenders BPER and Banco BPM declined 1.7% and 1.08% respectively.

Sovereign bond yield spreads narrow

Government bond markets registered easing risk premiums across the eurozone as the trading session progressed. The spread between Italian 10-year BTPs and German Bunds narrowed to 115.9 basis points by late afternoon, after earlier widening to 131 basis points, matching levels recorded in April 2025. Italy's 10-year sovereign bond yield dropped 8.6 basis points to 4.6%, while Germany's 10-year Bund yield fell 6.1 basis points to 3.44%. France's 10-year OAT yield stood at 4.91%, with the French-German yield spread narrowing to 146.5 basis points after touching 150 basis points earlier in the day for the first time since 2012. In the United States, 10-year Treasury yields moved lower to 5.23% as investors recalibrated monetary policy projections.

Commodity and foreign exchange movements

Crude oil prices fell across international benchmarks, with Brent crude sliding 3.1% to $99.14 per barrel and West Texas Intermediate dropping 4.5% to $88.70 per barrel. Market reports attributed the decline to discussions among European governments regarding the potential release of strategic fuel reserves, alongside monitoring of regional developments near the Strait of Hormuz. Lower crude prices prompted profit-taking on several European energy producers, leading Repsol down 1.3%, TotalEnergies down 0.55%, and BP down 0.3%, whereas Shell edged up 0.3%. European natural gas settled near €73.97 per megawatt-hour on the Dutch TTF hub, showing little change on the day. Gold ticked up 0.16% to $4,182.64 per ounce. In foreign exchange trading, the euro held steady at $1.12 against the dollar, while the British pound traded higher at $1.32.