European markets end the week in the red, following Wall Street’s shift in momentum

Indices

European equity markets remain near record or multi-year highs, underpinned by resilience in key benchmarks and strong sectoral flows. The FTSE MIB Index (FTSEMIB.MI) is trading at 43.54K, showing a minor decline of -0.38 but maintaining a STRONG_LONG micro-trend signal. This persistent uptrend, especially pronounced in financials and energy, suggests robust institutional buy interest. The DAX Performance Index (^GDAXI) stands at 24.2K, down -0.4 and registering a FLAT short-term trend, indicative of consolidation after prior gains.

France’s CAC 40 (^FCHI) is at 8.08K with a very modest pullback, reflecting investor caution amid ongoing political uncertainty, and maintains a FLAT micro-trend. The FTSE 100 (^FTSE) trades at 9.65K with a decline of -0.58, also exhibiting a FLAT trend as UK markets digest recent gains. The IBEX 35 (^IBEX) prints 16.86K, slightly lower but near record highs, while the Euro STOXX 50 (^STOXX50E) is at 5.73K, maintaining a STRONG_LONG trend and signaling continued bullish conviction for Eurozone blue chips. The technical landscape points to continued upside potential in the FTSE MIB and Euro STOXX 50, while other indices’ FLAT trends suggest investors are in a tactical holding pattern.

Stocks

Sector rotation remains a central theme in today’s market action. The banking and basic resources sectors are leading, with Spanish banks Sabadell (SABE.MC) and Caixabank (CABK.MC) delivering year-to-date returns of 67 and 47, respectively. Steelmakers like ArcelorMittal, Aperam, Thyssenkrupp, and SSAB have each advanced more than 3, buoyed by regulatory changes to steel import quotas.

On the downside, the automotive and technology sectors face pressure, with BMW (BMW:GR) falling -8.9 after a weak earnings outlook, and French banks Société Générale, Crédit Agricole, and BNP Paribas weighing on the CAC 40 due to recent declines. Inditex (ITX.MC) has surged 7 after robust winter sales, supporting the IBEX 35’s record performance. Technical upgrades for industrials like Schneider Electric and Siemens Energy have also driven notable gains in the sector.

Economic News

Recent macroeconomic data present a constructive, if nuanced, backdrop. Spain’s GDP growth rate has slowed to 0.6, down from 0.8, and retail sales growth has softened to 4.2. Eurozone consumer confidence improved by 0.7 to -14.2, exceeding expectations and providing a boost to consumption-driven sectors. Inflation in the Eurozone remains contained, with the latest CPI at 2.1, which reduces immediate pressure for further policy tightening.

ECB Chief Economist Philip Lane has highlighted "upside surprises" in eurozone inflation, challenging expectations for an imminent decline. Policy commentary and economic data releases remain central to market direction, especially ahead of the ECB’s next meeting.

Economic Events

The macroeconomic calendar is packed with high-impact events this week. Key releases include Eurozone Industrial Production, GDP figures for Germany and the region, Germany’s ZEW Economic Sentiment Index, and France’s Consumer Price Index. For Spain, data on the Producer Price Index, Consumer Confidence, and Retail Sales will be closely watched for their influence on the IBEX 35 and related sectors. The upcoming European Central Bank meeting on December 18, 2025, is particularly pivotal as updated inflation forecasts and any policy shift could significantly affect market sentiment and risk appetite.

Market Sentiment

Overall sentiment across European equity markets is cautiously optimistic. Sustained capital inflows into blue-chip indices such as the Euro STOXX 50 (^STOXX50E) and FTSE MIB Index (FTSEMIB.MI) are supported by expectations of a dovish central bank stance and stable credit conditions. Outperformance in banking and basic resources is helping to offset persistent weakness in autos and technology, leading investors to adopt a tactical, sector-rotational approach. While technical and macroeconomic conditions remain supportive of further advances, investors are maintaining vigilance ahead of upcoming high-impact events, as global uncertainties and political factors could quickly alter the risk landscape.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.