European stocks saw a slight increase on Monday, with the pan-European STOXX 600 index rising by 0.1% by 1000 GMT, marking an eighth consecutive day of gains. The boost was primarily driven by mining and luxury stocks after reports indicated that China would adopt a more relaxed monetary policy next year to support its slowing economy. The country’s Politburo meeting confirmed plans to implement “appropriately loose” policies, signalling the first major shift towards easing since 2010.
Mining stocks in Europe, especially those with exposure to China, surged by 2.8%, while luxury goods companies such as LVMH and Richemont each gained more than 2%. Despite this, Germany’s DAX index, which had reached a record high earlier, dipped by 0.1%. Market experts viewed the news from China as largely positive, although they noted that the change in policy was more about the language used than any immediate action. Lewis Grant, senior portfolio manager at Federated Hermes, highlighted that the wording of the announcement was encouraging for economic prospects.
Energy stocks also saw a rise, increasing by 1.2%, in line with the upward movement of oil prices. This gain was attributed to growing concerns about instability in the Middle East following political developments in Syria. Meanwhile, the aerospace and defence sector faced a slight decline, falling by 1% to a one-week low.
Market sentiment remained mixed, with some analysts noting that while markets appeared bullish, there were underlying concerns about potential challenges in the new year. Traders were closely monitoring upcoming U.S. inflation data, which would influence expectations around Federal Reserve rate cuts, and the European Central Bank was expected to lower rates by 25 basis points later in the week.
In individual stock movements, Banco BPM remained stable, while its suitor UniCredit saw a 0.9% drop after Credit Agricole announced plans to increase its stake in the bank. German meal-kit company Hellofresh experienced a significant drop of 6.7%, reportedly due to a U.S. investigation into child labour allegations. On the other hand, CompuGroup Medical saw a dramatic 32% surge after announcing advanced talks with CVC Capital Partners for a potential acquisition, which could value the company at 22 euros per share.
European markets remained optimistic as mining and luxury sectors led the way following China’s announcement of looser monetary policies. Despite some mixed movements in other sectors, investor focus turned to the upcoming economic data from the U.S. and Europe, as traders prepare for potential rate cuts and broader economic shifts.
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