European Markets Mixed Amid Holiday Trading, Mining Stocks Rise

European stock markets experienced a week of reduced trading due to the holidays, with a general weakness except for mining stocks, which benefited from rising commodity prices, including crude oil. Gold, silver, and copper reached new record highs. In Piazza Affari, Juventus performed well, while Stellantis declined.

European Markets Struggle for Gains

European stock exchanges struggled to gain momentum after the previous session's record close, while Asian markets rose, and futures indicated a positive opening for Wall Street. Trading volumes were low, and analysts anticipated market volatility due to thin liquidity during the holiday-shortened week.

The pan-European Stoxx 600 index stood at 586.22, down 0.22%. Major regional markets also declined, with London and France each down 0.3%, and the FTSE MIB down 0.2%. Last week, the Stoxx 600 gained over 1% after a slowdown in U.S. consumer price inflation boosted expectations of further rate cuts by the Federal Reserve. The European Central Bank held its monetary policy rates steady and adopted a more positive outlook on the Eurozone economy.

Sector Performance

The banking sector held steady with a reference index of 352.19 (+0.01%), after leading gains last week. The sector has grown by over 65% since the beginning of the year, driven by a recovery in mergers and acquisitions activity and a relatively stable economic environment. The European defense and aerospace sector fell by 0.4% after rising over 3% in the previous two sessions. Abivax jumped 7.6% following rumors of a potential acquisition by U.S. pharmaceutical giant Eli Lilly.

The European technology sector rose by 0.5%, rebounding after closing the previous week down 0.9%. Commodity-related sectors saw gains, with the reference sector up 0.8% after gold prices exceeded $4,400 for the first time, and copper prices reached a record level. The oil company sector gained 0.2%, tracking the increase in oil prices due to renewed tensions between the U.S. and Venezuela and the escalation of hostilities between Iran and Israel.

Stoxx 600 on Track for Strong Annual Performance

The Stoxx 600 index is on track to record its strongest annual performance since 2021, benefiting from falling interest rates and global investors diversifying their portfolios away from high-valued U.S. technology stocks. "We expect the positive macroeconomic dynamics in the Eurozone to persist and corporate earnings growth to resume... we particularly like banks, public utilities, industry, technology, and Germany," said analysts at UBS Global Wealth Management.

Italian Industrial Production Prices Rise

In Italy, industrial production prices registered a sharp increase in November (+1%), driven by energy prices, according to Istat. On an annual basis, they are down 0.2%.

Spread and BTP Trends

The spread between the yields of ten-year government bonds in Italy and Germany was at 66 basis points, with the 10-year BTP at 3.56%.

Milan Stock Exchange Performance

In Milan, the FTSE MIB fell by 0.2% to 44,673 points, mirroring the performance of the FTSE Italia All-Share, which fell by 0.20% to 47,357.38 points.

Movers in Piazza Affari

Saipem (+3.20%) stood out in Piazza Affari after securing an offshore EPCI contract in Qatar worth approximately $3.1 billion. Telecom Italia Risparmio (+5.54%) also gained following the board's announcement of a January meeting to approve the conversion of savings shares into ordinary shares (-1.1%).

Juventus continued its rally (+2.8%), adding to last Friday's +7.2% gain, driven by bets on a renewed offer from Tether after the Agnelli family rejected the initial proposal.

Banking Sector Shows Mixed Results

Banks were little changed, with major players Unicredit down 0.2% and Intesa SanPaolo down 0.05%. Pop Sondrio was the strongest performer (+0.8%).

Here is a summary of the key market indices:

The performance of various sectors is summarized below:

Below are the movers in Piazza Affari:

Factors Influencing the Market

Several factors influenced the market, including expectations of further rate cuts by the Federal Reserve, the European Central Bank's positive outlook on the Eurozone economy, and rising commodity prices due to geopolitical tensions.

The following table shows the Industrial Production Prices in Italy:

Key data regarding Italian and German bond yields:

UBS Global Wealth Management's Outlook

Analysts at UBS Global Wealth Management expressed a positive outlook on the Eurozone economy and corporate earnings growth, favoring sectors such as banks, public utilities, industry, technology, and Germany.

Geopolitical Tensions Impacting Oil Prices

Renewed tensions between the U.S. and Venezuela, along with the escalation of hostilities between Iran and Israel, contributed to the increase in oil prices.

The table below summarizes the performance of key European sectors: