European stock markets experienced a slight decline midway through Thursday as traders closely examined the implications of the impending decisions from the Trump Administration, fluctuations in oil-and-gas prices influenced by tensions in the Middle East and Russia, and the ongoing low interest rates that are impacting economic forecasts.
Bank stocks showed weakness with concerns that lower interest rates could negatively affect profitability in 2025, while stocks in the oil sector saw gains amidst the geopolitical uncertainty. Investors were also closely monitoring the Wall Street futures, which were indicating mixed results, albeit primarily lower closes in the preceding sessions on Asian exchanges.
In recent economic news, the Eurozone's final manufacturing purchasing managers index (PMI) recorded a figure of 45.1 in December, a slight decrease from November's 45.2, further descending below the crucial 50-mark that acts as a delineation between economic growth and contraction, as reported by S&P Global. The pan-European Stoxx Europe 600 Index reported a mid-session drop of 0.2%.
In sector performances, while the Stoxx Europe 600 Technology Index edged up by 0.1%, the Stoxx 600 Banks Index recorded a notable decrease of 2.4%. Meanwhile, the Stoxx Europe 600 Oil and Gas Index also saw a marginal increase of 0.1%, contrasting with the Stoxx 600 Europe Food and Beverage Index, which fell by 0.1%. Looking at the European REIT index, known as REITE, it experienced a small decline of 0.1%, while the Stoxx Europe 600 Retail Index saw a decrease of 0.6%.
In terms of individual national market assessments, Germany’s DAX index was down by 0.3%, the FTSE 100 in London remained mostly unchanged, the CAC 40 in Paris declined by 1%, and the IBEX 35 in Spain suffered a loss of 1.3%. The yield on benchmark 10-year German bonds continued on a downward trend, now hovering around 2.33%.
In commodity trading, front-month North Sea Brent crude oil futures saw an increase of 1.4%, reaching a price of $75.72 per barrel. Additionally, the Euro Stoxx 50 volatility index reported an increase of 2.6%, standing at 17.44, which still falls within the below-average volatility range for European stock markets in the coming 30 days—an indication perceived positively by investors.
A volatility reading surpassing 20 suggests more turbulent market conditions are ahead, while a figure below indicates a more stable trading environment..