European markets are expected to open lower on Monday amid ongoing concerns about the global economy and a strong U.S. dollar. The pan-European Stoxx 600 index is projected to decline by 0.75% at the open, with most sectors trading in negative territory. This follows a weak close for regional markets last Friday, as investors digested the latest U.S. jobs report.
The data showed that nonfarm payrolls increased by 256,000 in December, significantly higher than the 155,000 forecast by economists. This unexpected strength in the labor market has raised worries that the U.S. Federal Reserve will be more cautious about cutting interest rates further. Investors are also keeping a close eye on euro zone government bond yields, which climbed to multi-month highs last week.
The focus this week will be on the U.S. December Consumer Price Index (CPI) report, due on Wednesday, and the Producer Price Index (PPI) report, scheduled for Tuesday. The U.S. dollar index, which measures the greenback against a basket of major currencies, hit a two-year high on Monday following the robust jobs report. By mid-morning in London, the index was up 0.3% to trade at 110, its highest level since November 2022.
European markets open with caution
In corporate news, a survey by accounting firm Deloitte revealed that U.K. companies are planning cost-cutting measures in 2025, including reductions in staffing costs, as they face economic challenges. The survey, conducted in December, showed the sharpest decline in hiring expectations since the Covid-19 pandemic, along with a two-year low in business confidence.
Novartis announced that the U.S. Court of Appeals has upheld the patent for its heart medication Entresto, reversing a previous decision by a U.S. District Court in Delaware. The company stated that Entresto’s pediatric exclusivity period will expire in July this year. British Prime Minister Keir Starmer unveiled plans to increase public sector compute capacity by twentyfold before the end of the decade, as part of the U.K.’s effort to create a homegrown rival to OpenAI.
The government also aims to expand data center capacity across the country to support AI model development and operations. Analysts at German investment bank Berenberg have warned that the wildfires around Los Angeles could cost European insurance giants up to €1 billion in payouts this year. At least seven European listed reinsurance firms are expected to bear the brunt of these losses, while JPMorgan analysts have identified at least two Japanese firms that are likely to incur significant payouts.
European markets are expected to open mixed on Monday, with the U.K.’s FTSE 100 index projected to open 22 points lower at 8,227, Germany’s DAX down 37 points at 20,182, France’s CAC 40 down 11 points at 7,413, and Italy’s FTSE MIB down 143 points at 34,999, according to data from IG. There are no major earnings or data releases scheduled for Monday.
