European stock markets experienced a positive close on Monday, as encouraging developments in both the regional services sector and stronger-than-anticipated growth in the Chinese services sector buoyed investor sentiment. Contributing to the sector's upward trajectory were expectations of further stimulus measures from the Chinese government and a reduction in concerns over potential tariff increases. These expectations were reinforced by reports suggesting that U.S. President-elect Donald Trump’s proposed tariff plans may not be as severe as initially feared.
Shares from the automobile and luxury sectors emerged as notable gainers during the session. The pan-European Stoxx 600 index rose by 0.95%. Meanwhile, the U.K.'s FTSE 100 increased by 0.31%, while Germany's DAX and France's CAC 40 advanced significantly by 1.56% and 2.24%, respectively. In Switzerland, the SMI also posted a gain of 0.58%.
Elsewhere across Europe, markets in Austria, Belgium, Greece, Iceland, Ireland, the Netherlands, Poland, Spain, Sweden, and Turkiye also ended the day higher. However, Denmark, Portugal, and Russia experienced weaker performances, and Norway closed without significant change.
Within the U.K. market, companies such as JD Sports Fashion, ICG, Antofagasta, Lloyds Banking Group, Entain, Barclays, Aviva, Melrose Industries, Diageo, and Scottish Mortgage posted gains ranging from 2% to 4%. Other notable performers included Anglo American Plc, Persimmon, Prudential, Pershing Square Holdings, Ashtead Group, Natwest Group, Schrodders, BP, and Barratt Redrow. Spectris Plc recorded a 2.7% gain following an upgrade by HSBC from "hold" to "buy."
Conversely, WPP shares fell almost 3%, while Rolls-Royce Holdings and Unilever ended the day lower by 2.56% and nearly 2.5%, respectively, after receiving a rating downgrade. Marks & Spencer also decreased by around 2%. RightMove, Reckitt Benckiser, Rentokil Initial, Endeavour Mining, and National Grid saw declines ranging from 1% to 1.25%.
In Germany, Infineon led with over an 8% increase, while Daimler Truck Holding and Sartorius both gained nearly 6%. Other major players such as Siemens Energy, BMW, Porsche, Bayer, Continental, Mercedes-Benz, Siemens, and Puma advanced between 3% and 5%. Volkswagen also gained more than 3%, amid reports of a memorandum of understanding with China's Xpeng Motors to collaborate on an ultra-fast charging network in China.
Meanwhile, Merck, Commerzbank, Adidas, Fresenius, HeidelbergCement, BASF, Siemens Healthineers, Deutsche Post, Fresenius Medical Care, Brenntag, and SAP gained 1.4% to 2.5%. However, Symrise, Deutsche Telekom, E.ON, Rheinmetall, Vonovia, Qiagen, and Deutsche Boerse closed down by 1% to 2%.
In France, STMicroElectronics surged nearly 8% following Taiwan's Foxconn's better-than-expected fourth-quarter revenue report. Dassault Systemes rose over 5%, while Schneider Electric, Hermes International, Legrand, LVMH, Stellantis, Teleperformance, Capgemini, Saint Gobain, and Societe Generale experienced gains from 3% to 5%. BNP Paribas, Pernod Ricard, Kering, Renault, Air Liquide, Michelin, Vivendi, Edenred, Sanofi, Eurofins Scientific, L'Oreal, Carrefour, Veolia, Accor, Credit Agricole, Unibail Rodamco, and TotalEnergies climbed between 1.5% and 3%.
According to S&P Global data, Germany's Composite PMI rose to 48 points in December from 47.20 points the previous month, with the Services PMI increasing to 51.20 from 49.30. Additionally, the Euro Area's Composite PMI improved to 49.60 from 48.30, with Services PMI in the region rising to 51.60 from 49.50.
In France, the HCOB France Composite PMI was revised upward to 47.5 in December 2024, compared to the initial flash estimate of 46.7 and the ten-month low of 45.9 recorded in November. The Services PMI increased to 49.3 in December, up from the earlier estimate of 48.2 and 46.9 the previous month. However, France's manufacturing sector experienced a contraction, with December's index at 41.9 compared to the preliminary 43.1 estimate.
S&P Global reported that the U.K. Services PMI rose to 51.4 in December 2024, surpassing November's 13-month low of 50.8 and the 51 expectation. The U.K. Composite PMI remained constant at 50.5, consistent with expectations of 50.7 according to a flash estimate.
In Germany, consumer price inflation rose for the third consecutive month, reaching an 11-month high in December, driven by higher food and service prices. Nonetheless, European Central Bank policymakers are expected to be less perturbed by this recent inflation spike, likely proceeding with another interest rate reduction in the forthcoming policy meeting.
Meanwhile, business sentiment in the U.K. deteriorated to its lowest since the mini-budget aftermath in late 2022, largely due to heightened concerns over taxation following the Chancellor's autumn statement, as revealed by the latest quarterly survey from the British Chambers of Commerce on Monday.
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