European stock markets managed to rebound from initial declines to close positively on Thursday, marking the first trading session of 2025. This performance came despite data indicating a significant downturn in manufacturing activity across key regional economies in December, alongside geo-political concerns that persist.
Automobile stocks faltered amid apprehensions regarding the impending tariff threats from the U.S. President-elect, Donald Trump. Conversely, energy stocks prospered, buoyed by rising oil prices.
The pan-European Stoxx 600 index rose by 0.6%. The FTSE 100 in the U.K. advanced 1.07%, Germany's DAX increased by 0.58%, and France's CAC 40 edged up by 0.18%. However, the Swiss market remained closed in observance of the New Year celebrations.
Elsewhere in Europe, stock markets in Belgium, Denmark, Finland, Greece, Iceland, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, and Turkey reported gains ranging from moderate to substantial, while Ireland concluded flat.
In the U.K. market, shares of Endeavour Mining surged nearly 5%, while Fresnillo rose by 4.5%. Other notable gainers included Marks & Spencer, Rolls-Royce Holdings, Airtel Africa, Centrica, Glencore, BP, Pershing Square Holdings, British American Tobacco, Hiscox, BT Group, Next, Shell, and Whitbread, all climbing by 2 to 4%.
AstraZeneca, Coca-Cola HBC, and the 3i Group also ended significantly higher. Meanwhile, Howden Joinery, St. James’s Place, Persimmon, and Intertek Group saw declines of 1 to 2%.
In Germany, RWE, E.ON, and Hannover Re rose by 2 to 3%. Brenntag, Qiagen, HeidelbergCement, Vonovia, Deutsche Bank, SAP, Deutsche Telekom, and Munich RE also recorded strong gains.
However, Rheinmetall decreased by approximately 2.5%. Volkswagen, Henkel, Fresenius Medical Care, Mercedes-Benz, Continental, BMW, Commerzbank, Daimler Truck Holding, and Sartorius fell by 0.6 to 2%.
In the French market, Airbus Group shares increased by over 3%. Safran, Michelin, Engie, Orange, Sanofi, TotalEnergies, ArcelorMittal, and Unibail-Rodamco also advanced, ranging from 0.7 to 1.7%.
On the economic front, the eurozone's manufacturing continued to contract in December due to accelerated declines in both orders and output, according to final data from S&P Global. The HCOB Manufacturing Purchasing Managers' Index dipped to a three-month low of 45.1 from 45.2 in November, aligning with the flash reading.
S&P Global reported that Germany's Manufacturing PMI registered at 42.5 in December, down from October and November's 43. This contraction was driven by marked reductions in output and new orders due to weak demand.
Further, S&P Global's latest data confirmed France's Manufacturing PMI plummeted to 41.9 in December from 43.1 in November, marking the sharpest decline since May 2020.
In the UK, the manufacturing sector experienced its steepest decline in almost a year, as output, new orders, and employment fell at increased rates. The Manufacturing PMI decreased to 47.0 from 48.0 in the previous month, with the flash reading at 47.3.
Additionally, U.K. house prices grew at a year-on-year rate of 4.7% in December, exceeding the 3.7% increase in November and the economists' forecast of a 3.8% rise, according to the Nationwide Building Society. However, month-on-month house price inflation slowed to 0.7% from 1.2% in November.