European stocks dipped slightly on Monday as investors took a cautious approach in the final trading session of the year. The Stoxx 600 index was down 0.4%, with trading volumes lower than usual due to the holiday season. US stock futures also edged lower, following a pullback on Wall Street last Friday.
The retreat was led by the “Magnificent Seven” tech giants that have driven much of this year’s market rally. Fund manager Nicolas Domont of Optigestion in Paris advised staying put in the current market conditions. He noted that the US remains the top investment destination, with growth stocks outperforming and positive earnings forecasts supporting an optimistic outlook.
Treasury yields fell, with the 10-year yield moving away from its highest levels since May. German bond yields initially rose but then erased gains after data showed Spanish inflation accelerated more than expected in December. This supports the case for the European Central Bank to continue gradually cutting interest rates.
The Bloomberg Dollar Spot Index held steady after gaining over 7% in 2024. Some traders are reducing risk exposure heading into year-end due to uncertainty about the global trade landscape in 2025, according to Tim Waterer, chief market analyst at Kohle Capital Markets Pty.
Cautious investor strategies for European markets
In Asia, shares of Jeju Air plummeted 8.7% to a record low in Seoul after one of its Boeing 737-800 aircraft crashed on Sunday, resulting in 179 fatalities. Boeing shares dropped more than 4% in US premarket trading. Investigators are looking into a possible bird strike or landing gear failure as the cause of the crash.
Nissan Motor Co. shares fell 5.7% in Tokyo amid concerns that the terms of its planned deal with Honda Motor Co. would give investors a smaller stake in the proposed joint holding company.
Despite mostly lower Asian shares on Monday, the MSCI Asia Pacific gauge is on track for a 7.6% gain in 2024, boosted by central bank policy easing and a rally in tech stocks related to artificial intelligence optimism. Former US President Jimmy Carter passed away on Sunday at his home in Plains, Georgia. The US stock market traditionally closes on the day of a presidential funeral, but no announcement has been made yet by exchange overseers.
Oil prices were little changed in quiet year-end trading, with the market focused on the outlook for 2025. Crude is set for an annual loss, with trading limited to a narrow range since mid-October. Gold is poised for one of its largest yearly gains this century.
