European stock markets ended the first week of 2024 on a subdued note, declining on Friday after posting significant gains at the start of the new year. Investor sentiment was dampened primarily by declines in the automobile, luxury, and travel sectors, as market participants remained cautious while seeking clearer investment directions.
A notable factor contributing to the downturn in luxury stocks was the nearly 30% decrease in duty-free sales in China's Hainan province over the past year.
The pan-European Stoxx 600 index slipped by 0.49%, with individual markets also showing weakness: the U.K.'s FTSE 100 fell by 0.44%, Germany's DAX dropped 0.59%, and France's CAC 40 declined by 1.51%. Conversely, Switzerland's SMI diverged from this trend, registering a modest gain of 0.2%.
Elsewhere in Europe, stock markets in Belgium, Denmark, Finland, Ireland, the Netherlands, Russia, and Spain ended the day in negative territory, while Iceland closed with minor losses. Markets in Greece, Norway, Poland, Portugal, and Turkiye posted gains, and Austria and Sweden recorded slight increases.
In the UK market, several major players including Diageo, Persimmon, Barratt, Redrow, EasyJet, Taylor Wimpey, Entain, Prudential, Whitbread, Spirax Group, Melrose Industries, and WPP saw declines ranging from 2% to 4%. However, Shell advanced over 1.5%, with BP, Pershing Square Holdings, Scottish Mortgage, DCC, British Land Company, British American Tobacco, Imperial Brands, and Centrica also closing higher.
Over in Germany, RWE increased nearly 2.5%, while Rheinmetall, Siemens Energy, and Hannover Rueck gained between 1.7% and 2%. Deutsche Bank, Commerzbank, and Deutsche Telekom posted moderate gains. On the downside, BASF, Puma, BMW, and Bayer lost between 2% and 2.5%, with Vonovia, Infineon, MTU Aero Engines, Sartorius, Porsche, SAP, Brenntag, Siemens, and Mercedes-Benz closing lower by 1% to 1.7%.
In the French market, Kering fell sharply by approximately 5.5%, ArcelorMittal decreased by 4.7%, and LVMH, Stellantis, Hermes International, and Pernod Ricard suffered losses of 3% to 4%. Additionally, Publicis Groupe, Michelin, Accor, Societe Generale, Saint-Gobain, Renault, Veolia, Essilor, L'Oreal, Dassault Systemes, BNP Paribas, Edenred, STMicroElectronics, Sanofi, Safran, Legrand, and Credit Agricole fell by 1% to 3%.
Germany's labor market remained steady in November, with the jobless rate holding at a seasonally adjusted 3.4%, as per Destatis data released on Friday. The number of unemployed individuals decreased by 2,000 from the previous month, totaling 1.52 million.
On an unadjusted basis, unemployment figures rose by 138,000, marking a 10.1% increase from the previous year, with the jobless rate escalating to 3.3% from 3.1%.
Meanwhile, employment levels showed little change in November compared to the prior year, maintaining the previous year's figures for the third month in succession, according to Destatis.
In the UK, mortgage approvals fell unexpectedly to a three-month low in November, and consumer credit growth slowed to its weakest pace in over two years, aligning with expectations of economic stagnation at year's end.
Data from the Bank of England revealed a drop in mortgage approvals to 65,720 in November from 68,129 the month before, contrary to projected increases to 69,000. However, approvals remained above the prior twelve-month average of 60,400.
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