European stock markets concluded Monday's session with declines amid slim trading volumes as investors largely opted to remain on the sidelines ahead of the upcoming New Year holidays. Investor sentiment was dampened by ongoing uncertainties concerning interest rates and the looming threats of a tariff war.
Today's trading performance was notably subdued, as it marked the last full trading day of the year 2024. With most markets set to close early on Tuesday for New Year's Eve and remain shut on Wednesday, activity was understandably limited.
A statement by European Central Bank Governing Council member Robert Holzmann, as reported by Austrian newspaper Kurier over the weekend, suggested that the ECB might postpone its next interest rate cut due to a recent inflation spike. This could further impact financial strategies into the new year.
In Italy, the Senate approved the government's deficit-reduction budget for 2025 on Saturday, emphasizing tax reductions and debt control measures. Meanwhile, in France, the newly appointed finance minister mentioned in an interview that the delayed 2025 budget plan aims for a deficit slightly above 5% to safeguard economic growth.
The pan-European Stoxx 600 index decreased by 0.46%. France's CAC 40 fell by 0.57%, while both the U.K.'s FTSE 100 and Germany's DAX declined by 0.35% and 0.38%, respectively. On the other hand, Switzerland's SMI saw a modest rise of 0.1%.
Across other European markets, Belgium, Denmark, Iceland, the Netherlands, Poland, Sweden, and Turkiye experienced significant downturns. Finland, Greece, Ireland, and Portugal saw marginal declines. Conversely, both Austria and Russia ended on a positive note, whereas Norway and Spain closed unchanged.
In the U.K. market, Fresnillo's stock dipped by 2.3%, and other companies such as St. James's Place, Antofagasta, Endeavour Mining, and Rolls-Royce Holdings recorded losses ranging from 1 to 2%. Nonetheless, Whitbread, Pershing Square Holdings, Schroders, Airtel Africa, IAG, and HSBC Holdings reported gains between 0.5% and 1.2%.
Germany's market saw losses between 1% and 2% for Sartorius, Puma, Siemens Healthineers, SAP, Munich RE, Brenntag, and Hannover Rueck. However, Commerzbank and Deutsche Bank managed moderate gains, with Volkswagen and BMW closing slightly higher.
In France, L'Oreal decreased by about 2%, with Edenred, Capgemini, Pernod Ricard, Legrand, STMicroelectronics, Publicis Groupe, LVMH, and Michelin falling between 1% and 1.5%. Credit Agricole, BNP Paribas, Endie, Orange, and Societe Generale, however, closed slightly higher.
In economic news, the KOF Swiss Economic Institute's survey data revealed a downturn in Switzerland's economic outlook for December, retracting after a rise in the previous month. The KOF Economic Barometer dropped more than anticipated to 99.5 in December from a revised 102.9 in November, against an expected 101.1, suggesting it slipped below its medium-term average.
Finally, preliminary estimates from Spain's statistical office, INE, indicated that consumer price inflation surged at the year's end, driven by rising fuel prices. The inflation rate rose more than expected to 2.8% in December, from 2.4% in November.
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