European stock markets were treading water in Thursday’s session, with investors largely refusing to take big directional bets ahead of a dense calendar that includes the European Central Bank’s final policy decision of the year, a widely anticipated Bank of England rate cut, and fresh U.S. inflation data later today.
As of around 5:00 a.m. EST (10:00 UTC), the pan-European STOXX 600 was up about 0.2% at 580.77 (as of 09:32 GMT / 4:32 a.m. EST), reflecting a market that is “waiting for the next catalyst” rather than chasing momentum into year-end. [1]
EU stocks steady as central banks dominate the day’s agenda
The tone across EU and wider European equities can be summed up in one word: cautious.
The STOXX 600’s modest uptick masked a split tape under the surface—retail and energy stocks were firmer, while heavyweight healthcare and banks leaned on the broader market. The result was a session that felt more like a positioning exercise ahead of policy headlines than a broad risk-on rally. [2]
Germany’s DAX was up 0.1%, and London’s FTSE 100 was also up 0.1% in early trading, according to Reuters’ market snapshot. [3]
The big market driver: ECB decision timing, messaging, and projections
For EU investors, the most consequential event later today is the European Central Bank decision—less about the rate itself (markets broadly expect a hold) and more about what officials signal next for 2026 policy.
The ECB’s own calendar indicates that monetary policy decisions are due at 14:15 CET, followed by a press conference at 14:45 CET, and then the staff macroeconomic projections at 15:45 CET. [4]
In U.S. Eastern time, those milestones translate roughly to:
- ECB decision:8:15 a.m. EST
- ECB press conference:8:45 a.m. EST
- ECB staff projections:9:45 a.m. EST [5]
Traders are especially focused on the ECB’s forward guidance after recent hawkish commentary from Isabel Schnabel put the idea of future rate increases back into the conversation—an unusual backdrop at a time when other major central banks have been discussing cuts. Reuters quoted Netwealth’s Iain Barnes noting that it’s “not unimaginable” the next move could be higher, and that markets are listening for “more clear guidance.” [6]
Bank of England expected to cut—supporting the FTSE, moving sterling and gilts
While the ECB is the euro area’s headline, London is also in focus.
The Bank of England is expected to cut its benchmark rate to 3.75% from 4%, which would mark the fourth cut of 2025, according to Reuters. Markets are also watching how close the Monetary Policy Committee vote is—Reuters reported expectations of a tight split and noted that the MPC has been narrowly divided in recent months. [7]
The policy backdrop has shifted after UK inflation fell more than expected to 3.2% in November, alongside signs of weakening growth and a softer labor market (including unemployment at its highest since 2021, per Reuters). Even so, Reuters emphasized that persistent services inflation and other “sticky” components may keep the BoE from sounding too dovish about the path ahead. [8]
For equities, a BoE cut can be a two-edged sword—supportive for rate-sensitive sectors, but also a reminder that growth is slowing. In Thursday’s early trading, however, the FTSE’s modest gain suggested investors were leaning into the “easier policy” side of that trade. [9]
Scandinavia adds to the “hold” narrative: Sweden and Norway keep rates unchanged
Beyond the euro area and the UK, Thursday also brought important policy signals in Northern Europe.
Sweden’s Riksbank left its policy rate unchanged at 1.75%, saying the Swedish recovery is under way, inflation has approached 2%, and the rate is expected to remain at this level “for some time to come.” The central bank also flagged global risks including geopolitical conflicts, uncertainty around U.S. foreign and trade policy, and high asset valuations—issues that can quickly spill into European risk sentiment. [10]
In Norway, Norges Bank kept its policy rate unchanged at 4%, reinforcing the idea that several European central banks are now in “hold and assess” mode heading into 2026. [11]
Market reaction in equities was muted: Reuters noted Sweden and Norway’s equity indexes were flat following the rate-hold decisions. [12]
Sector watch: retail and energy lead, while healthcare and banks lag
Thursday’s early market leadership is useful for understanding how investors are positioning into central bank risk.
Retail stocks rally as consumers and defensives attract interest
European retail was among the standout pockets, with the STOXX retail sector up 1.2%. Budget fashion group H&M rose 2.3%, while consumer giants including Nestlé and Unilever also posted gains, helping stabilize the broader index. [13]
The message from price action: investors are not abandoning equities—but they are gravitating toward areas perceived as resilient if growth slows.
Energy shares supported by higher oil prices
Energy stocks were up 0.4%, helped by rising crude. [14]
Oil prices were higher in Thursday’s global session—Reuters reported Brent around $60.10 a barrel and U.S. WTI around $56.38. [15]
Higher oil often supports Europe’s large integrated producers, including UK heavyweight BP.
Healthcare and banks weigh on the STOXX 600
Healthcare was down 0.1%, with index heavyweights Novo Nordisk and AstraZeneca each falling about 0.5%. [16]
European banks—despite being among the better performers earlier in the month—were down 0.2%, a reminder that financials can be sensitive to even small shifts in rate expectations and yield curves on days like this. [17]
Stock movers: Aeroports de Paris tumbles; Rational jumps; BP in focus on CEO shake-up
Beyond sectors, several single-stock moves were steering headlines and watchlists:
- Aéroports de Paris (ADP) fell 8.2%, making it the STOXX 600’s laggard after France’s transport regulator ART rejected its 2026 tariff proposal, according to Reuters. [18]
- Rational AG jumped 4.2% after UBS upgraded the German kitchen appliances maker to “buy” from “neutral,” Reuters said. [19]
- BP edged higher after naming Meg O’Neill, the head of Australia’s Woodside Energy, as its next CEO. Reuters noted this is a historic choice: O’Neill is set to become BP’s first externally appointed CEO in its more-than-century history and the first woman to lead any of the world’s top five oil majors, taking over in April following the abrupt exit of Murray Auchincloss. [20]
In a market looking for leadership and clear strategy, CEO transitions at mega-cap names like BP can have outsized influence on local benchmarks, sector sentiment, and even M&A speculation.
Rates, FX, and bonds: euro steady, dollar firm; euro zone yields hold near recent ranges
Cross-asset signals have been consistent with the “wait-and-see” equity tone.
In FX markets, Reuters reported:
- The dollar index was around 98.39
- The euro near $1.1744
- Sterling near $1.3367 [21]
Reuters said interest-rate futures were pricing a near-certain quarter-point BoE cut, while the ECB was expected to hold and show “little appetite” for near-term cuts—an important backdrop for European exporters and multinational earnings translation. [22]
In euro zone bonds, yields were steady ahead of the ECB. A Reuters report carried by the London Stock Exchange showed:
- Germany’s 10-year Bund yield around 2.86% (down about 0.5 basis points on the day)
- Italy’s 10-year yield around 3.52%
- The Italy–Germany spread near 64.4 basis points [23]
Stable yields typically reduce pressure on equity valuation multiples—especially important after recent bouts of volatility tied to global tech and AI-linked selling.
The U.S. factor: inflation data and Fed politics ripple into European trading
Even though the focus today is European central banks, Europe’s morning session is also being shaped by what comes next in the U.S.
Reuters noted investors were waiting for the U.S. inflation report for November, after earlier U.S. employment data did not meaningfully shift expectations for the Federal Reserve’s path. [24]
Politics is also creeping into the macro narrative. Reuters reported that U.S. President Donald Trump said he would announce his pick for the next Fed chair soon and that it would be “someone who believes in lower interest rates by a lot.” That kind of commentary can affect global rate expectations, currency pricing, and risk sentiment far beyond U.S. markets—especially on a day when Europe is already highly sensitive to central bank messaging. [25]
What to watch next in EU markets today
With European markets open and liquidity building into the mid-morning, the next moves are likely to hinge on three scheduled catalysts:
- BoE decision and minutes (London) — expected rate cut and, crucially, the voting split and any shift in guidance language. [26]
- ECB decision and Lagarde press conference (Frankfurt) — the rate hold is widely expected, but the market’s real test is forward guidance and the ECB’s updated projections. [27]
- U.S. inflation print — likely to shape the global rate complex into the U.S. open, feeding back into European equities via dollar moves, yields, and sector rotation. [28]
For now, the early read from EU stock markets today is straightforward: stocks are not panicking, but they are not committing either—and the next decisive swing may come not from earnings, but from central bank nuance. [29]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.ecb.europa.eu, 5. www.ecb.europa.eu, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.riksbank.se, 11. www.norges-bank.no, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. apnews.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.lse.co.uk, 24. www.reuters.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.ecb.europa.eu, 28. www.reuters.com, 29. www.reuters.com
