European Stocks Flat as Trump Takes Office
European stocks closed flat on Monday, having earlier reached a three-month high, as investors welcomed a measured approach to trade policy from the Trump administration. The pan-European Stoxx 600 index closed at 523.87 points, following a more than 2% gain over the last week.
The automobile sector, which is sensitive to trade tariffs, rose by 1.1%, while the dollar lost 1% and the euro gained 1.2%. The move was seen as a relief for markets, which had been concerned about the potential impact of Trump’s protectionist policies on trade.
The automobile sector rose by 1.1% on Monday, with gains led by Germany’s benchmark stock index, which added 0.4%. The Euro zone banking index also gained 1.2%, followed by a 1.2% rise in the basic resources sector.
In contrast, utilities fell 1.1%, the most of any sector, with Nemetschek jumping 10.4% after reporting its full-year results. Siemens Energy dropped 3.4% following a downgrade by UBS to “sell”.
German Finance Minister Joerg Kukies said Berlin would adopt a wait-and-see approach regarding Trump’s actions, while German producer prices rose less than expected in December, increasing by 0.8% 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 January 30.
The annual World Economic Forum in Davos, Switzerland, is also set to take place this week, with investors keenly watching the event for any insights into the Trump administration’s economic policies. U.S. stock markets were closed for Martin Luther King Day, keeping trading volumes lighter than usual.