Key Takeaways

• Eurozone PMI data exceeded expectations, indicating a modest return to expansion on 26 October 2025.
• The report set a cautiously optimistic tone for European markets, with investors responding to economic signals reinforcing central bank vigilance and market resilience.
• Top story: Eurozone PMI readings surpassed forecasts, showing moderate expansion in key sectors.
• The euro strengthened as the ECB hinted at possible rate hikes in 2026.
• The Italian FTSE MIB rose 0.8%, supported by strong corporate earnings.
• Oil prices advanced 2% amid tightening OPEC supply forecasts.

Introduction

On 26 October 2025, Eurozone PMI data offered a moderate upside surprise, signaling renewed expansion and setting a cautiously optimistic tone for the day. The euro strengthened following signals from the ECB regarding potential rate hikes in 2026, reflecting market adaptation and disciplined investor focus.

Top Story

Eurozone PMI Beats Expectations

The Eurozone Manufacturing PMI rose to 52.4 in October 2025, marking the first expansion in 18 months and surpassing analyst expectations of 49.8. This signals a substantial turnaround in the region’s industrial activity, with notable improvement in new orders.

German factories led the recovery, with Germany’s manufacturing PMI reaching 53.2. France and Italy also returned to growth territory. The figures indicate the Eurozone’s largest economy is emerging from its recent slowdown.

Business confidence reached its highest level since January 2024. Manufacturers attributed this to improved supply chains and stabilizing energy costs. Survey respondents noted increased hiring and stronger export demand, particularly from Asian markets.

Also Today

Central Banks and Currencies

European Central Bank officials indicated the possibility of another rate increase, citing persistent core inflationary pressures. Board member Isabel Schnabel stated that interest rates may need to remain at restrictive levels longer than previously expected.

Following these remarks, the euro appreciated against major currencies, reaching $1.12 against the US dollar. Currency traders increased long positions on the euro, reflecting greater confidence in the Eurozone’s economic outlook.

Markets and Corporate Developments

The FTSE MIB index reached a new year-to-date high, driven by strong performance in the banking sector. Italian financial institutions delivered better-than-expected third-quarter results, benefiting from the higher interest rate environment.

Crude oil prices stabilized above $82 per barrel after volatility earlier in the week. According to market analysts, OPEC+ production discipline and improving Chinese demand supported prices.

Market Wrap

European Markets Close Higher

The pan-European STOXX 600 index gained 0.8%, led by manufacturing and banking stocks. The DAX increased by 1.2%, while France’s CAC 40 advanced 0.9%. In currency markets, the euro strengthened against both the dollar and sterling.

What to Watch

• ECB Monetary Policy Meeting: 14 November 2025, with press conference at 14:30 CET
• BASF Q3 Earnings Release: 31 October 2025, pre-market
• OPEC+ Ministerial Meeting: 4 November 2025 in Vienna
• Eurozone Inflation Report: 31 October 2025, 11:00 CET

Conclusion

The upside surprise in Eurozone PMI data marks a tangible shift toward industrial recovery, supporting a stronger euro and fostering greater market confidence. Central bank guidance and strong corporate earnings in Italy further reinforce the constructive outlook, while oil’s gains reflect wider resilience. For further context on disciplined strategy during periods of market change, visit the Mindset & Psychology hub. What to watch: the ECB’s policy meeting on 14 November 2025 and the upcoming Eurozone inflation report as key indicators for further policy direction.