- German industrial production rose 1.5% in November, outpacing expectations, but earlier data showed weaknesses in orders and retail sales.
- UK retail giants Tesco and Marks & Spencer faced stock drops despite strong holiday sales.
- Oil prices steadied after sharp declines, impacted by US fuel inventory surges and a stronger dollar.
European markets traded mostly lower on Thursday, with Germany’s DAX and France’s CAC 40 down 0.2%, while the UK’s FTSE 100 was largely unchanged.
Corporate performance in the UK retail sector drew significant attention. Tesco’s shares declined over 3% despite strong holiday sales, as investors reacted to maintained profit guidance.
European Equities Tread Carefully Amid Mixed Signals
The Eurozone inflation rate climbed to 2.4% in December, above the European Central Bank’s 2% target. Policymaker François Villeroy indicated that if inflation eases in the coming quarters, rate cuts could commence by mid-2025. Meanwhile, German industrial production rose 1.5% in November, exceeding expectations and providing a glimmer of hope amid mixed economic data from the region.
UK retailers struggled to maintain investor confidence despite positive holiday sales data. Tesco’s robust growth of 4.1% during the festive period failed to offset market concerns tied to profit guidance. Similarly, Marks & Spencer’s economic headwinds overshadowed a strong 6.4% sales increase during Christmas, leading to a sharp decline in its stock value.
Oil prices remained relatively stable after losses in the previous session. The decline was driven by a significant rise in US fuel inventories, with gasoline stocks increasing by 6.3 million barrels, much higher than expectations. Both WTI and Brent futures traded slightly lower on Thursday, weighed down by a stronger US dollar.
Investors are likely to tread cautiously amid continued economic uncertainty, with ECB policies and corporate earnings remaining in focus. German industrial resilience and anticipated rate adjustments could help shape a more stable trajectory for European markets.
The European markets reflect a delicate balancing act between encouraging signs of industrial resilience and the broader challenges of inflation, retail pressures, and energy volatility. As economic indicators evolve, investor sentiment will hinge on policy clarity and corporate adaptability.
“Success is not final, failure is not fatal: It is the courage to continue that counts.” – Winston Churchill
