[MARKET ANALYSIS] European equities bounce out of correction territory, with Banks benefiting the most from the positive risk tone; US equity futures continue its reversal

European bourses (STOXX 600 +2.2%) have rebounded from Monday's losses, with many of the indices returning out of correction territory (>10% pullback from ATHs). The IBEX 35 (+3.1%) is the outperformer, with gains in Santander (+6.2%) supporting the index after the Co.'s President bought 300,000 shares for almost EUR 3mln, as well as the improvement in overall risk tone. The brighter risk environment follows Monday's comments by US President Trump, who suggested that the Iran war could be coming to an end.
Sectors are in the green, ex-Energy (-0.7%). Sectors that have been hit the hardest due to the Iran war have seemed to have bounced the highest this morning, with Banks (+4.1%), Basic Resources (+3.3%) and Travel and Leisure (+3.0%) sitting near the top of the pile.
Key movers include Volkswagen (+3.7%) and Hugo Boss (+4.3%). For Volkswagen, the Co. missed FY operating result estimates, with US tariffs and Porsche-related expenses being the key culprits. The carmaker also guided 2026 operating result at the lower end of expectations. However, the announcement of 50,000 jobs to be cut and the focus on more savings have boosted the Co.'s shares. For Hugo Boss, FY revenue beat expectations and the Co. guided 2026 sales above analyst estimates.
US equity futures (ES/RTY +0.4%, NQ +0.5%) continue to trade higher after reversing the losses posted at the start of Monday's cash session. The gap between the VIX and ES still remains wide, a consolidation in the equity space could be expected as volatility calms down. A VIX < 20 would be a help for equity investors if the ES is to retest 7,000.