Europe: Stocks recover, banks lead; ECB decision, US data in focus
EUROPEAN shares ended higher on Monday in broad-based gains led by banks, kicking off a week packed with central bank decisions and delayed US economic data on a positive note, as investors returned to risk assets after last week’s subdued finish.
The pan-European Stoxx 600 closed 0.74 per cent higher at 582.54, close to a record high. Major regional bourses also advanced, with Spain’s ending at a record close - up 1.2 per cent.
The Stoxx 600 slipped into negative weekly territory at the last moment on Friday, mirroring Wall Street after US chipmaker Broadcom’s profit margin warning sparked renewed concerns about a potential bubble in artificial intelligence stocks.
The market staged a broader recovery on Monday, with 19 of the 20 main sectors trading higher, led by heavyweight banks , which rose 1.8 per cent to close at a level last seen in May 2008.
Insurers rallied a 1.2 per cent jump, and travel stocks climbed 1.3 per cent, further boosting the main index.
XTB’s research director Kathleen Brooks said that risk sentiment was stabilising after the sell-off as markets turned their attention to macroeconomic factors this week.
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An index of automakers was the only outlier, down 0.14 per cent, after two straight days of gains. The losses were limited by an expected reprieve for regional carmakers, with Brussels set to reverse the EU’s effective ban on sales of new combustion-engine cars from 2035.
On the geopolitical front, Ukrainian President Volodymyr Zelensky resumed talks in Berlin with envoys of US President Donald Trump. As part of a deal to end the nearly four-year-old war, the US negotiators told Ukraine to withdraw its forces from the eastern Donetsk region.
Major defence firms slipped, with Rheinmetall and Hensoldt down 2.6 per cent and 1.2 per cent, respectively. On the flip side, Ukraine-exposed miner Ferrexpo jumped 7.1 per cent.
The Stoxx 600 has had a positive December so far, as optimism around US interest rate cuts and progress on a Russia-Ukraine ceasefire lifted sentiment.
“Markets are expecting earnings growth and looser monetary policy, so many investors think this is a supportive market environment for European indices,” said Roland Kaloyan, head of European equity strategy at Societe Generale.
On the macro front, the European Central Bank’s monetary policy decision is due on Thursday, with markets widely expecting it to keep rates on hold.
Market sentiment shifted last week following unexpectedly hawkish comments from ECB policymaker Isabel Schnabel, who suggested a rate hike could be the next move, though it would not happen in the near term.
Decisions from Sweden’s Riksbank, the UK’s Bank of England and Norway’s Norges Bank are also expected this week.
Delayed jobs and inflation data in the US this week could also set the tone for global markets heading into 2026.
Among others, Argenx shares lost 4.4 per cent after the Dutch biopharma company discontinued a phase 3 trial for its thyroid eye disease treatment.
French Drugmaker Sanofi fell 3.9 per cent after expectations grew that the US Food and Drug Administration would delay a decision on its multiple sclerosis drug, tolebrutinib.
Schneider Electric rose 2.5 per cent after brokerages lifted the target price on the French electrical equipment maker. REUTERS
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