European stock markets concluded Monday's trading session with losses, burdened by sluggish activity in both the manufacturing and services sectors across key economies in the region. Further compounding the sentiment were political uncertainties in France and Germany.
Contributing to the negative market atmosphere was Moody's credit rating agency decision to downgrade France's rating. This downgrade increased the nation's borrowing costs and cast doubts over the new government's ability to address the nation's worsening financial landscape.
The pan-European Stoxx 600 index fell by 0.12%. France's CAC 40 dropped 0.71%, whereas the U.K.'s FTSE 100 and Germany's DAX saw declines of 0.46% and 0.45%, respectively. Switzerland's SMI, contrastingly, saw a slight rise of 0.06%.
Among other European markets, Austria, Finland, Greece, Iceland, Ireland, the Netherlands, Norway, Poland, Russia, Sweden, and Turkiye all experienced losses. Meanwhile, Belgium, Denmark, Portugal, and Spain ended the day on a positive note.
In the UK market, Entain fell over 6% following the initiation of civil penalty proceedings by Australia's anti-money laundering regulator, related to breaches of the country’s anti-money laundering and counter-terrorism financing laws.
Centrica's shares dipped by around 3.7%. Other notable declines included Convatec Group, Endeavour Mining, BP, Persimmon, Croda International, SSE, Unite Group, Pershing Square Group, Airtel Africa, Rentokil Initial, Prudential, Associated British Foods, B&M European Value Retail, Shell, British Land, Fresnillo, Aviva, Sainsbury (J), Rio Tinto, and Ashtead Group, which all fell between 1% and 3%.
Conversely, Rolls-Royce Holdings saw an increase of nearly 2%, while 3i Group, Halma, IAG, and Bunzl closed with gains ranging from 1% to 1.4%.
The German market witnessed a downturn with Mercedes-Benz, Vonovia, and BMW losing between 3% and 4.2%. Porsche ended nearly 3% lower, withdrawing its profit forecast for 2024 due to prospective non-cash impairment charges linked to investments in Volkswagen AG and Porsche AG.
Volkswagen, RWE, Daimler Truck Holding, Continental, BASF, Puma, E.ON, Bayer, Covestro, HeidelbergCement, and Brenntag all recorded losses between 1% and 2.3%.
Siemens Energy surged about 4%, with Commerzbank climbing 2%. Adidas, MTU Aero Engines, Rheinmetall, and Munich RE secured gains between 1% and 1.3%.
In the French market, Vivendi soared over 40% following the listing of its significant entities — Canal+, Louis Hachette Group, and Havas — approved by Vivendi shareholders for enhanced valuation.
Stellantis and Teleperformance both saw declines exceeding 4%. Other notable fallers included Dassault Systemes, TotalEnergies, STMicroElectronics, Kering, Michelin, Engie, Renault, Pernod Ricard, Carrefour, Unibail Rodamco, LVMH, Capgemini, Airbus Group, and Vinci, with declines ranging from 1% to 2.3%.
Essilor closed with a gain of about 1.3%, with Safran and Edenred achieving modest upticks.
The Eurozone's private sector contracted towards the year's end, notably in Germany and France, while the rest of the region showed a solid upturn in output. Data from S&P Global indicated the HCOB flash composite output index increased to 49.5 in December from 48.3 in November, indicating a softer contraction in output.
The manufacturing Purchasing Managers' Index (PMI) remained steady at 45.2, slightly missing the forecast of 45.3, while the services PMI improved to 51.4 in December from 49.5 in November, surpassing expectations.
France's private sector contracted for a fourth consecutive month in December, with both manufacturing and services output declining, according to S&P Global. The HCOB composite output index rose to 46.7 from 45.9 in November, with a score below 50 signaling contraction.
Unexpectedly, the manufacturing PMI dropped to 41.9 from 43.1 in November, missing the predicted 43.2. However, the services PMI advanced to 48.2, above the anticipated unchanged figure of 46.9.
Germany’s private sector continued its shrinkage in December, albeit at a slower pace due to a slight rebound in services, as revealed by S&P Global. The HCOB composite output index stood at 47.8 in December, up from November’s nine-month low of 47.2, though still below the 50 threshold marking contraction.
The flash services PMI rose more than expected to 51.0 from 49.3, exceeding forecasts of 49.5. Conversely, the manufacturing PMI fell to 42.5 from 43.0, contrary to expectations of an uptick to 43.1.
In the UK, the private sector exhibited steady growth in December, with gains in services counterbalancing a sharper decline in manufacturing output. The composite output index remained at 50.5 in both November and December, a 13-month low.
The factory PMI dropped to an 11-month low of 47.3, below November’s 48.0, while expectations were at 48.4. In contrast, the services PMI increased to 51.4 from 50.4 in November, surpassing the forecast of 50.9.
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