European Markets Decline Ahead of Key Eurozone Inflation Data

European stock markets dipped on Tuesday, reversing some of Monday’s strong gains ahead of crucial eurozone inflation data. At 03:10 ET (08:10 GMT), Germany’s DAX fell 0.1%, France’s CAC 40 slipped 0.3%, and the U.K.’s FTSE 100 dropped 0.7%. Monday had seen impressive gains across European bourses, with the CAC 40 up 2.2% and the DAX climbing 1.5%, driven by robust performance in the auto sector following reports suggesting U.S. President-elect Donald Trump’s tariff plans might be less severe than anticipated. However, optimism waned after Trump dismissed these reports in a social media post.

Attention has now shifted to the eurozone’s latest inflation data, the final reading before the European Central Bank’s January 30 meeting. Investors are anticipating a potential 100-basis-point interest rate cut in the first half of 2025, with any signs of further easing in inflation likely supporting such a move. However, preliminary data from Spain and Germany indicated higher-than-expected inflation increases, suggesting that the eurozone’s numbers could surprise to the upside. December’s eurozone consumer inflation is forecasted to have risen 2.4% annually, up from 2.2% in November.

In corporate developments, U.K. clothing retailer Next PLC saw its stock rise 3.5% after it raised its full-year profit forecast, expecting to achieve a £1 billion profit for the first time, driven by unexpectedly strong international sales during the festive season. Meanwhile, French food caterer Sodexo’s stock dropped over 6% after reporting a nearly 5% rise in first-quarter organic revenue, falling short of market expectations. Strong growth in regions like India, Brazil, and Australia was offset by declining activity in Continental Europe.