European stocks began the week with a shaky start, experiencing further declines as trading progressed on Monday. However, by the afternoon, they managed to claw back some losses, yet still concluded the session in negative territory.
Market sentiment remained dampened by diminishing hopes for interest rate cuts from major central banks, including the Federal Reserve and the Bank of England. This, coupled with concerns over global economic growth and climbing bond yields, affected investor confidence.
European indices saw a downturn, with the Stoxx 600 falling by 0.55%. In the UK, the FTSE 100 decreased by 0.29%, Germany's DAX slipped by 0.41%, France's CAC 40 dipped by 0.3%, and Switzerland's SMI dropped by 0.76%.
Elsewhere across Europe, markets in Austria, Belgium, Denmark, Greece, Ireland, the Netherlands, Poland, Spain, Sweden, and Turkey finished the day on a weaker note. Iceland, Portugal, and Russia bucked the trend, ending higher, while markets in Finland and Norway remained stable.
In the UK market, shares of IAG, Fresnillo, RightMove, EasyJet, Diageo, and Rolls-Royce Holdings tumbled between 2% and 3.6%, with Persimmon closing nearly 2% down. Companies like Pearson, Halma, Howden Joinery, Games Workshop, AstraZeneca, Diploma, GSK, Informa, Prudential, and Relx saw declines ranging from 1% to 1.7%. Entain experienced a sharp uptick following strong earnings guidance, though it ultimately closed flat.
Intermediate Capital Group saw a rise of approximately 2.3%. Notable gainers included Natwest Group, Associated British Foods, Centrica, Glencore, Shell, BP, Rio Tinto, Schroders, Rentokil Initial, Airtel Africa, Anglo American Plc, Vodafone Group, and Barclays Group, all gaining between 1% and 2%.
In Germany, Puma shares fell by around 2.5%, while HeidelbergCement, Adidas, Vonovia, Henkel, Fresenius Medical Care, Brenntag, Siemens Healthineers, Daimler Truck Holding, Fresenius, and Rheinmetall each dropped between 1% and 2%. Conversely, Sartorius climbed nearly 3.5%, with Qiagen, Porsche, RWE, Deutsche Telekom, and Symrise closing 1% to 1.7% higher.
The French market saw Unibail-Rodamco fall by 3.3% and STMicroelectronics by 2.7%, with Publicis Groupe, Airbus Group, Schneider Electric, and Edenred losing between 1% and 2%. Stellantis dropped almost 2% after announcing a reduction of over 100,000 units in its U.S. vehicle inventory by late 2024. On the upside, Vivendi rose by about 2.1%, Bouygues by 1.8%, and TotalEnergies, Orange, and Carrefour by 1.1% to 1.3%, with Engie, BNP Paribas, and ArcelorMittal also closing in positive territory.
In the United States, Labor Department figures released on Friday revealed a surge of 256,000 in non-farm payroll employment for December, following a downwardly revised increase of 212,000 in November. Economists had projected a rise of 160,000 jobs from the initially reported 227,000 for the prior month. The U.S. unemployment rate inched down to 4.1% from 4.2%, against expectations for no change.
German bond yields rose by 0.92% overnight to 2.5915%, swinging between 2.567% and 2.6105% during the session, hitting the highest levels since June 2024. Expectations of higher inflation from the latest ECB survey and reduced forecasts of U.S. rate cuts drove the increase.
Meanwhile, the UK 10-year gilt yield surged to 4.9%—the highest in over 16 years—amid waning expectations for significant Bank of England rate cuts this year, fueled by ongoing inflation concerns and economic uncertainties.
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