European Stocks Close Lower On Inflation, Interest Rate Concerns

(RTTNews) - After a weak start and a subsequent fall to lower levels, European stocks staged a recovery of sorts in afternoon trade on Monday, but still ended the day's session on a negative note.

Fading prospects of interest rate reductions by major central banks, including the Federal Reserve and Bank of England, uncertainty about global economic growth and rising bond yields continued to hurt sentiment.

The pan European Stoxx 600 closed down 0.55%. The U.K.'s FTSE 100 ended lower by 0.29%, Germany's DAX lost 0.41% and France's CAC 40 settled 0.3% down, while Switzerland's SMI lost 0.76%.

Among other markets in Europe, Austria, Belgium, Denmark, Greece, Ireland, Netherlands, Poland, Spain, Sweden and Turkiye closed weak.

Iceland, Portugal and Russia ended higher, while Finland and Norway closed flat.

In the UK market, IAG, Fresnillo, RightMove, EasyJet, Diageo and Rolls-Royce Holdings lost 2 to 3.6%. Persimmon closed nearly 2% down.

Pearson, Halma, Howden Joinery, Games Workshop, AstraZeneca, Diploma, GSK, Informa, Prudential and Relx lost 1 to 1.7%. Entain rose sharply after the company issued strong earnings guidance. However, the stock failed to hold gains and settled roughly flat.

Intermediate Capital Group climbed about 2.3%. Natwest Group, Associated British Foods, Centrica, Glencore, Shell, BP, Rio Tinto, Schrodders, Rentokil Initial, Airtel Africa, Anglo American Plc, Vodafone Group and Barclays Group gained 1 to 2%.

In the German market, Puma ended lower by about 2.5%. HeidelbergCement, Adidas, Vonovia, Henkel, Fresenius Medical Care, Brenntag, Siemens Healthineers, Daimler Truck Holding, Fresenius and Rheinmetall lost 1 to 2%.

Sartorius rallied nearly 3.5%. Qiagen, Porsche, RWE, Deutsche Telekom and Symrise closed higher by 1 to 1.7%.

In the French market, Unibail Rodamco closed down 3.3%. STMicroElectronics ended 2.7% down. Publicis Groupe, Airbus Group, Schneider Electric and Edenred lost 1 to 2%.

Stellantis ended lower by nearly 2% after the company reduced its excess vehicle inventory in the U.S. by over 100,000 units in late 2024.

Vivendi climbed about 2.1%. Bouygues gained 1.8%, while TotalEnergies, Orange and Carrefour closed higher by 1.1 to 1.3%. Engie, BNP Paribas and ArcelorMittal also closed higher.

Data from the Labor Department Friday showed U.S. non-farm payroll employment surged by 256,000 in December, after jumping by a downwardly revised 212,000 jobs in November.

Economists had expected employment to climb by 160,000 jobs compared to the addition of 227,000 jobs originally reported for the previous month.

The unemployment rate in the U.S. edged down to 4.1% in December from 4.2% in November. The rate was expected to come in unchanged.

German bond yields have increased 0.92% overnight to 2.5915%. The yield which was at 2.568% at the previous close ranged between 2.567% and 2.6105% in the day's trading, testing the highest levels since June 2024. Rising inflation expectations in the ECB survey and expectations of fewer rate cuts in the U.S. fueled the spike in yields.

The yield on the UK 10-year gilt climbed the highest level in over 16 years, rising to 4.9%, amid fading prospects of significant rate cuts by the Bank of England this year due to persistent concerns over inflation and economic uncertainties.