European stock markets traded lower on Monday in the last full trading session of 2024, as investors braced for a quiet end to the year. The pan-European Stoxx 600 index fell 0.5% in early afternoon trading in London, with most sectors posting losses. Technology, industrial and media stocks led the declines, while oil and gas stocks managed to post gains.
Trading volumes remained light as markets across the region prepared to close early or remain closed until January 2 for the New Year holiday. Despite Monday's modest performance, European stocks are on track to end the year with moderate gains. The Stoxx 600 is up about 5.5% in 2024, in stark contrast to the U.S. S&P 500 index, which is up about 25% over the same period.
U.S. markets also opened lower on Monday, reflecting lighter-than-usual trading activity.
Asian markets presented a mixed picture at the start of the day. Investors have been tracking political turmoil in South Korea and economic data from Japan, which revealed a slower contraction in industrial activity this month.
South Korean airline stocks took a hit following the tragic Jeju Air plane crash on Sunday that killed 179 people. Jeju Air shares hit an all-time low, while Boeing, whose 737-800 plane was involved in the crash, saw its U.S.-listed shares fall 3.5% in premarket trading. South Korean authorities have announced plans to inspect all Boeing 737-800 planes operated by local carriers as part of the investigation into the crash. Meanwhile, shares of French plane maker Airbus fell 0.6% in London, while Dassault Aviation rose 1.5%, making it one of the best-performing stocks on the Stoxx 600.
The European airline sector has shown mixed results. Lufthansa gained 0.7%, ranking among the best performers on the Stoxx 600 in afternoon trading. British Airways' parent company IAG was stable, while EasyJet fell 0.4%.
British online grocery retailer Ocado found itself at the bottom of the Stoxx 600, with its shares down 3.6%. The drop followed reports last week of widespread problems with Christmas deliveries, with many customers losing key items. In a statement, Ocado acknowledged that a small percentage of holiday orders were not delivered as expected and apologized to affected customers.
Elsewhere in Europe, Spain's National Statistics Institute (INE) released a flash estimate showing the country's EU-harmonized annual inflation rate rose to 2.8% in December, up from 2.4% in November. According to a Reuters poll, the figure beat analysts' expectations by 2.6%. Core inflation, which excludes volatile items such as food and energy, also rose to 2.6% year-on-year.
The inflation update came as European Central Bank (ECB) Governing Council member Robert Holzmann suggested the ECB may slow the pace of interest rate cuts due to persistent inflation. He told the Austrian newspaper KurierHolzmann said: “For the moment I don't see any increase in interest rates. What could happen, however, is that it will take longer before the next interest rate cut.”
Meanwhile, Italian lawmakers have approved the country's 2025 budget, which aims to reduce the fiscal deficit to comply with EU rules and bring it closer to 3%. In France, Finance Minister Eric Lombard said so La Tribune Dimanche that the French government's 2025 budget would target a deficit of just over 5%, according to a Reuters translation.
Oil and gas stocks remained a bright spot in an otherwise sluggish market, while broader European markets are poised to end 2024 with modest gains despite global headwinds. Investors now turn their attention to 2025, with inflation and monetary policy expected to remain key themes into next year.
