Europe: Stocks clock worst quarterly showing since 2022

EUROPEAN stocks recorded their worst quarterly showing in more than two years on Tuesday (Dec 31), as uncertainty around interest rates and the Trump administration’s policies halted a rally that had pushed several markets to record highs in 2024.

The pan-European Stoxx 600 added 0.6 per cent on the final trading session of the year, but clocked a quarterly decline of about 3 per cent – its biggest since July 2022.

Trading volumes were thin ahead of the New Year holiday, with bourses in Germany, Italy and Switzerland already closed on Tuesday. Those in France, Spain and the UK had an early close.

“The cautious mood aligns with global trends, as investors pare back positions ahead of the New Year amid uncertainty over monetary policy and the economic outlook under a Trump presidency,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

High valuations, climbing Treasury yields and uncertainties about 2025 have all contributed to the risk-off sentiment in the past few sessions on both sides of the Atlantic but the main US indexes have posted strong gains in 2024.

The S&P 500 has climbed nearly 24 per cent in 2024 while the Stoxx 600 is up just 5.9 per cent as slowing European and Chinese economies, automakers’ troubles and France’s political turmoil weighed on the mood.

German stocks outperformed broader European markets in 2024 with a near-19 per cent jump, while political instability and concerns about a widening fiscal deficit dragged down France’s CAC 40 by 2.1 per cent.

European shares had hit an all-time high in September, riding on the coattails of an AI-driven surge on Wall Street and supported by interest rate cuts from the European Central Bank.

The UK’s FTSE 100 advanced 5 per cent in 2024, its fourth consecutive year of gains.

Sector-wise, banks and insurers led the surge in 2024, while food and beverage stocks and automakers underperformed. REUTERS