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European equities edged higher on Monday, kicking off the last full trading week of the year with investors balancing lingering year-end optimism against a packed calendar of central bank decisions and delayed U.S. macro releases.
By 03:05 ET (08:05 GMT), Germany’s DAX rose 0.4%, France’s CAC 40 gained 0.4%, and the U.K.’s FTSE 100 climbed 0.5%.
Central banks take center stage: ECB steady, BoE more finely balanced
Risk sentiment has been supported by last week’s Federal Reserve rate cut, but investors are now shifting focus to Europe’s policy outlook.
- European Central Bank (Thursday): Markets broadly expect the ECB to hold the key rate at 2% for a fourth straight meeting. The key question is tone: stronger eurozone growth data (0.3% QoQ in Q3) could push the ECB to lean firmer on 2026 risks — not necessarily signaling imminent hikes, but potentially reinforcing a “higher for longer” bias if inflation persistence returns.
- Bank of England (this week): The BoE decision looks less clear-cut, with expectations building that Governor Andrew Bailey could tip a narrow 5–4 vote toward a 25 bp cut to 3.75% from 4.0%, especially as growth momentum has softened and inflation pressures appear to be easing.
Other late-year policy decisions from Riksbank and Norges Bank add to the global liquidity narrative investors are using to price risk assets into year-end.
U.S. data backlog could reset rate expectations
The week also brings several delayed U.S. releases, including October retail sales and the key November nonfarm payrolls report. After the Fed emphasized a data-dependent path, these prints matter disproportionately because they help fill in the macro “blind spot” created by the government shutdown.
Any upside surprise in jobs or spending could revive “higher-for-longer” fears, while weaker readings would reinforce the case for further easing — and potentially support equities, credit, and other risk assets.
Europe watches PMIs and inflation; China remains a macro overhang
In Europe, investors will track December PMI surveys and inflation readings in both the eurozone and the U.K. for confirmation that disinflation is holding while growth remains fragile.
Meanwhile, China is again acting as a drag on global sentiment:
- Industrial production and retail sales reportedly missed expectations, while fixed asset investment weakened.
- Property-sector stress remains in focus after China Vanke failed to secure approval to delay payments on a bond maturing December 15 — a reminder that the real estate deleveraging cycle is still unresolved and could pressure global demand expectations.
Corporate watch: Sanofi disappointment, Hikma leadership change
With earnings season largely done, single-name catalysts are driving pockets of volatility:
- Sanofi said its MS drug tolebrutinib failed to meet the primary endpoint in a Phase 3 trial for primary progressive multiple sclerosis — a clear negative headline that can weigh on sentiment around pipeline valuation.
- Hikma Pharmaceuticals announced CEO Riad Mishlawi is stepping down by mutual agreement, a development markets typically treat cautiously until succession clarity improves.
Oil rebounds, but oversupply narrative still dominates
Crude prices firmed modestly after last week’s steep decline:
- Brent +0.4% to $61.34
- WTI +0.4% to $57.46
The rebound reflects short-term support from geopolitical headlines (including U.S.–Venezuela tensions and Russia–Ukraine peace-talk uncertainty), but the broader message remains bearish: last week’s >4% drop was driven by renewed concern that global supply growth is running ahead of consumption.
If that oversupply theme persists, oil’s upside may remain capped even when risk sentiment improves elsewhere.
