European shares hit their highest levels in nearly three months on Monday, fuelled by notable gains in banking and travel stocks. With investor attention pivoting to Donald Trump’s inauguration as the next U.S. president, market sentiment remains a delicate balance of optimism and caution.
The pan-European STOXX 600 index edged up 0.1% by mid-morning, continuing momentum from last week’s robust 2% climb. However, trading volumes were subdued due to the U.S. market holiday for Martin Luther King Day. Investors are keenly watching Trump’s expected executive actions on immigration, energy, and trade, which could redefine global economic dynamics. Market analyst Ipek Ozkardeskaya highlighted that European equities are navigating between buoyant global sentiment and the ambiguity of Trump’s policy impact.
Despite apprehension about potential protectionist measures, a tempered stance from the Trump administration could offer reassurance to global markets. The banking sector led gains, rising 0.7%, reflecting renewed confidence in European financials. However, a 1.1% dip in utility stocks tempered the broader index’s upward movement.
Economic indicators added another layer of complexity to Monday’s trading. German producer prices rose by 0.8% in December, falling short of expectations. Meanwhile, European Central Bank official Robert Holzmann warned that additional rate cuts could jeopardise the institution’s credibility, especially amid signs of rising inflation. Market speculation suggests the ECB could announce a 25-basis-point rate cut in its forthcoming meeting.
Investors also have their eyes on the World Economic Forum in Davos, where influential figures from business and politics are expected to discuss critical global challenges. In corporate developments, Swedish tech firm Hexagon saw shares rise on the appointment of Anders Svensson as CEO, while Siemens Energy experienced declines following a UBS downgrade. Belimo Holding stood out as a top performer, surpassing revenue expectations and driving investor confidence.
European markets continue to demonstrate resilience as investors digest key economic and political developments. As the week unfolds, market players will closely monitor policy signals, central bank decisions, and corporate earnings for further guidance.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
