France Risk Premium Drops After Moody’s Hold; EU Readies Curbs on Chinese Imports

French bond risk slid sharply after Moody’s refrained from downgrading the nation’s credit rating, easing investor concern about fiscal stress. The spread investors demand to hold 10‑year French OATs over German bunds narrowed as much as 11 basis points to 157 basis points on Monday, while French equities and the euro outperformed regional peers.

Policy moves in Brussels signaled further friction with China. The European Union is preparing safeguard measures targeting imports from sectors including chemicals, furniture and machinery, Bloomberg reported — options under consideration range from import caps to tariffs — with a formal proposal possibly arriving as soon as the first quarter of 2027. The developments add a regulatory overhang to trade flows even as Chinese firms make inroads in European markets.

Automakers from China outsold Japanese rivals in Europe for the first time over a full quarter, capturing a 12.7% market share versus 11.9% for Japan, underscoring the competitive pressure on established manufacturers.

Macro indicators offered a mixed backdrop for markets. Germany’s business expectations unexpectedly improved for a sixth consecutive month: the Ifo institute’s expectations index rose to 91.6 in October from 90.4 in September, beating the Bloomberg consensus which had forecast a decline to 90.

Diplomatic activity aimed at calming the Middle East also drew attention. Top security officials from Saudi Arabia, Pakistan and Turkey were slated to meet Iranian leaders on Monday in hopes of reviving talks and averting a wider escalation of regional hostilities.

Markets opened the week with a cautiously positive tone as oil retreated from six‑month highs and investors braced for a heavy slate of tech earnings that could recalibrate views on the AI investment theme. European stocks advanced about 0.5%, led by gains in France; Hong Kong rose roughly 0.5% while Japanese and Mainland Chinese markets were largely flat. U.S. futures pointed to a flat start, with Brent crude trading roughly 2% lower near $115 a barrel.