European stocks rebounded on Friday, October 9, as oil prices and bond yields softened amid hopes of a pause in the Middle East conflict. The pan-European STOXX 600 index climbed 0.9% to 630.83 points by 8:41 GMT, recovering from a nearly four-month low hit on Thursday. The relief came as oil prices dipped over 1% after US President Donald Trump stated that the US would not attack Iran before the midterm elections next month, easing investor concerns about inflationary pressures and aggressive central bank policies.
Despite the broader market recovery, telecom stocks faced significant declines following SpaceX's announcement of a deal to acquire a nationwide low-band spectrum portfolio in the US. The telecom index fell 3.4% to an eight-month low, with Deutsche Telekom dropping 8%. The company holds a 54% stake in T-Mobile US, which slid 7% in US premarket trading. Other major telecom firms like Vodafone, Orange, and Telefonica also saw drops of 4.5%, 3.4%, and 3.3%, respectively.
Analysts at Equita Research noted that SpaceX's entry into the telecom sector poses a potential competitive threat to incumbent players, particularly in Europe. However, they emphasized that short-to-medium term risks for the Italian market, one of the most competitive in terms of mobile prices, are not significant. Investors are now looking ahead to the third-quarter earnings season to assess how companies are navigating higher inflation, interest rates, and political uncertainties.
Analysts expect STOXX 600 companies to report a 21% year-over-year profit growth in the third quarter, with energy and basic materials firms likely driving the gains. Barclays strategists highlighted that while the economic backdrop remains challenging, valuations and positioning have become more compelling.