EUROPEAN stocks closed flat on Monday, having earlier hit a three-month high on expectation Donald Trump would refrain from increasing tariffs on US trading partners as soon as he is inaugurated as president.
The pan-European Stoxx 600 closed flat at 523.87 points, after adding more than 2 per cent over the last week.
The automobile sector, which is particularly sensitive to news of tariffs, rose by 1.1 per cent.
Donald Trump will issue a broad trade memo on Monday that directs federal agencies to evaluate US trade relationships with China, Canada and Mexico, rather than using his first day in office to immediately impose tariffs, an incoming Trump administration official said.
In response, the U.S. dollar lost 1 per cent while the euro gained 1.2 per cent.
“There is a sense that it’s going to be more of a measured approach from Trump and that’s music to markets. That’s just what we needed to hear after months of worrying over how aggressive he may apply trade tariffs,” Fiona Cincotta, senior market analyst at City Index, said.
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Gains were short-lived as caution took hold as Trump took the oath of office at 12.00 pm ET (1700 GMT).
European equities have been jittery on concern Trump’s protectionist policies could stoke inflation in the United States and Europe.
“There is still an element of uncertainty,” Cincotta added.
Germany is particularly vulnerable to any tariffs. German Finance Minister Joerg Kukies said Berlin would adopt a wait-and-see approach regarding the new US president’s actions.
Germany’s benchmark stock index rose 0.4 per cent.
The Euro zone banking index added 1.2 per cent, the most among all sectors, followed by a 1.2 per cent gain in the basic resources sector.
Utilities fell 1.1 per cent, the most of any sector.
Among other stand-outs, Nemetschek jumped 10.4 per cent after the German software developer reported its full-year results.
Siemens Energy dropped 3.4 per cent, with traders pointing to a downgrade by UBS to “sell”.
On the macro front, German producer prices rose less than expected in December, increasing by 0.8 per cent on the year.
European Central Bank policymaker Robert Holzmann said the central bank could damage its credibility if it cut interest rates when inflation rises faster than anticipated, even temporarily.
The ECB is widely anticipated to trim rates by a quarter point at its next policy meeting on Jan 30.
The annual gathering of the world’s political, business and financial leaders at the World Economic Forum (WEF) in the Swiss town of Davos is another keenly watched event this week.
US stock markets were closed for Martin Luther King Day, keeping trading volumes lighter than usual. REUTERS
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Publish date : 2025-01-20 14:12:00
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