Stoxx 600 rises 0.05% as Fitch cuts France outlook to negative
Key Facts
The European Stoxx 600 rose 0.05% in a Reuters report published on the morning of November 2, while technology shares gained 0.40%, in a session without a clear direction for equities. The move came after Fitch changed its outlook for France to negative from stable, while keeping its sovereign rating at A+, according to France’s ratings data from the French Treasury Agency. The decision puts French public finances under greater scrutiny, as preliminary estimates showed gross domestic product contracting 0.1% quarter on quarter in the third quarter. Sentiment in bond markets was fragile amid concerns over France’s fiscal outlook and continued unrest in the streets. Reuters said euro zone bond yields changed little after rising the previous week.
Fitch attributed the outlook revision to deteriorating public finances and political fragmentation, both of which weaken the prospects for stabilising debt, alongside weaker growth, higher borrowing costs and a widening deficit since its review in August. The agency said, "The emerging political debate ahead of the presidential election has not materially strengthened Fitch’s confidence." This reflects its concern that the political environment does not support a sustained deficit reduction that would lead to debt stabilisation. The agency expects the debt-to-GDP ratio to rise to about 124% in 2028, compared with 115.7% in 2025. This path comes as quarterly growth contracted after output was unchanged in the second quarter.
GDP components in the third quarter showed weakness in investment and foreign trade. Gross fixed investment fell 0.6%, after declining 0.5% in the second quarter. The contribution of foreign trade to growth turned negative by 0.6 percentage points, after being positive by 0.6 percentage points in the previous quarter. Exports fell 1.7% in the third quarter, after rising 2.8% in the second quarter, according to the National Institute of Statistics and Economic Studies (Insee). The figures show a decline in two sources of economic activity in the quarter when output contracted.
By contrast, household consumption accelerated to 0.4% in the third quarter from 0.2% in the previous quarter. General government consumption continued to rise, recording 0.3% after 0.4% in the second quarter, according to Insee. This increase in consumption did not prevent output from contracting, with investment falling and foreign trade’s contribution turning negative. The differing performance of activity components gives a more detailed picture of the French economy than the overall GDP figure alone. Preliminary estimates had shown output unchanged in the second quarter before it fell in the third quarter.
In energy markets, Brent crude, the international benchmark, fell 3.9% to $109.01 a barrel in early trading on Monday, November 2, according to the Associated Press. This is an early-trading figure, while the initial draft cited a different figure from another brief; it is therefore not a daily closing price. In equities, investors were focused on more than developments in France, with Apple’s results in view as earnings season continued. They were also digesting the latest decisions by the Federal Reserve and the European Central Bank, alongside the U.S. midterm elections scheduled for Tuesday, November 3. Reuters described the week as pivotal for markets amid the convergence of these drivers.
Attention will next turn to updated French economic data. Insee has scheduled publication of detailed third-quarter figures for November 27, 2026, at 8:45 a.m. The institute has also scheduled publication of its preliminary GDP estimate for the fourth quarter on January 29, 2027, at 7:30 a.m. The detailed data will provide a subsequent review of GDP components in the quarter that saw a quarterly contraction. The preliminary fourth-quarter estimate will be the next checkpoint for gauging the course of activity after that reading. The debt figures cited by Fitch remain tied to the agency’s forecasts for the coming years, rather than to quarterly GDP data alone.