The ECB Governing Council left the Eurosystem's key interest rates unchanged following its September meeting. The deposit rate, which is decisive for steering monetary policy, has therefore remained stable at 2.0% since June. No further interest rate cuts are expected for 2025, and expectations for interest rate cuts in 2026 are also rather low, suggesting that the cycle of interest rate cuts in Europe has come to an end. Meanwhile, the Fed lowered its key interest rate by a further 25 basis points, with the upper limit of the interest rate corridor now at 4.25%. In its accompanying statement, the Fed referred to a noticeable economic slowdown in the first half of 2025. It also noted that the economic outlook was characterized by a high degree of uncertainty. While the S&P reached new highs (+3.5% in September) thanks to monetary easing combined with positively surprising earnings in the technology sector and the ongoing hype surrounding AI, European markets merely remained robust without setting new records. Although the partially unresolved tariff conflicts remained an issue globally, they were pushed into the background by the markets.
A look at Europe shows the Stoxx 600 up 1.5% in September, closing out a thoroughly positive third quarter. Performances across the sub-sectors were naturally mixed. Leading the way were basic materials stocks, which continued their recovery of the past two months, significantly supported by the strong performance of mining companies, which benefited from rising gold and copper prices triggered and accelerated by an accident and the associated production interruption at the Grasberg mine in Indonesia. Retail and technology stocks were also among the top performers, with both sectors supported by price jumps in individual stocks, namely H&M after convincing quarterly figures and ASML, which reacted very positively to the Nvidia-Intel deal. Bank stocks continued their upward trend, with the Stoxx 600 Banks Index now up 46.5% year-to-date. Food stocks in particular tended to be weaker, suffering from changing consumer behavior.
The ATX recorded growth of 1.2% in September, marking the eighth of nine months this year in which Austria's leading index closed in the blacks. Since the beginning of the year, it has now posted gains of 26.6%, clearly outperforming the Stoxx 600, which gained 10.6% over the same period. The ATX is now finally approaching its all-time high, which it reached more than 18 years ago, on July 9, 2007, to be precise (intraday just under 5,011 points). The ATX's performance this year is well above its earnings growth, which is currently seen by consensus at +10.7% (for 2025). The P/E ratio has been rising steadily for almost three years and now stands at 11.3x, exactly the average of the last 10 years. By comparison, the Stoxx 600 is currently trading at a P/E ratio of 15.9x, while the S&P has a P/E ratio of 25.3x, which Fed Chairman Powell recently described as a “fairly high valued.” This is certainly not the case for the ATX; on the contrary, a look at the earnings momentum gives hope for further price increases. Consensus forecasts predict further earnings growth for 2026 and 2027 of +17.1% and +9.5% respectively, combining to +28.2% in two years, which is certainly far from being priced in at this level.
The ATX is still around 8% off its all-time high, and we believe it is only a matter of time before it finally breaks through this barrier – most likely before the end of this year. Capital flows toward Europe, the catch-up potential of small and mid-caps, interesting (and in some cases highly weighted) sectors, and the region's ties to CEE, which is converging with Western Europe in macro-economic terms, all speak in favor of the Austrian stock market. And, of course, the dividend yield.
Author:
Christoph Schultes, MBA, CIIA
Chief Equity Analyst Austria
Erste Group Bank AG
1 October 2025
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.