European stock markets retreat; German Chancellor Scholz loses confidence vote
Investing.com — European stock markets fell Monday, as traders digested regional activity data amid political turmoil, ahead of the Federal Reserve’s final policy meeting of the year.
At 11:45 ET (16:45 GMT), Germany’s DAX dropped 0.25%, the UK’s FTSE 100 slipped 0.5%, and France’s CAC 40 fell 0.7%.
European equity markets have slipped at the start of the new week, with investors wary ahead of the final policy-setting meeting of the Federal Reserve later in the week.
The US central bank is widely expected to cut interest rates once more on Wednesday, helping to boost economic activity in the world’s largest economy, but could also signal a pause to its rate-cutting cycle in January.
There are also policy meetings due this week from the Bank of England, Bank of Japan and the Chinese central bank
Eurozone business activity improves
Data released earlier Monday showed an improvement in eurozone business activity eased this month.
The HCOB’s preliminary composite eurozone Purchasing Managers’ Index, compiled by S&P Global, rising to 49.5 in December from November’s 48.3, as the bloc’s dominant services industry bounced back to growth and offset a long-running contraction in the manufacturing industry.
However, this was still shy of the 50 mark separating growth from contraction.
Germany’s Scholz loses confidence vote
German Chancellor Olaf Scholz has lost confidence vote in the parliament, paving way for an early election in February, following the collapse of his government.
Scholz is expected to request President Frank-Walter Steinmeier to dissolve parliament and formally call new elections, tentatively set for February 23.
France underperforms following Moody’s downgrade
Credit ratings agency Moody’s (NYSE:MCO) unexpectedly downgraded France’s rating on Friday, bringing it to “Aa3” from “Aa2” with a stable outlook for future moves.
The news came hours after President Emmanuel Macron named veteran centrist politician Francois Bayrou as his fourth prime minister this year.
Sharp (OTC:SHCAY) decline in UK business confidence
A new survey from Make UK and BDO revealed that British manufacturers’ business confidence has plunged to its lowest level in a year, driven by rising costs.
While output and orders remain stable and companies continue with recruitment and investment plans, sentiment has deteriorated significantly since the third quarter.
In Q3, 58% of manufacturers expressed optimism about the economic outlook, a stark contrast to the current report.
Now, 70% of manufacturers have reported cost increases of up to 20% in the past year, with 8% seeing cost surges as high as 50%.
Vivendi (OTC:VIVHY) soared after conglomerate is split up
In the corporate sector, Canal+ stock fell on their London debut on Monday while fellow Vivendi (EPA:VIV) spinoffs Havas and Louis Hachette rose in Amsterdam and Paris, after shareholders of the French media conglomerate voted to split up the French conglomerate.
Vivendi stock soared over 40%.
Porsche (ETR:PSHG_p) stock fell 2.4% after the company withdrew its full-year 2024 profit guidance after identifying an expected impairment loss in its investments.
Entain (LON:ENT) stock slumped over 6% for alleged systemic breaches of anti-money laundering and counter-terrorism financing laws in Australia.
Oil prices edge lower
Oil prices edged lower on Monday, driven by cautious market sentiment ahead of the Federal Reserve meeting and renewed scrutiny of Chinese economic data for insights into energy demand.
At 11:45 ET, Brent crude futures for February dropped 0.9% to $73.40 per barrel, while West Texas Intermediate (WTI) crude dropped 1.6% to $70.21 per barrel.
Both contracts recorded stellar gains last week, bolstered by new European Union sanctions on Russian oil and expectations of tighter sanctions on Iranian supply.
However, concerns over sluggish demand have limited the gains, particularly from China, the world’s largest crude importer.
(Navamya Acharya contributed to his article.)