European markets start December in negative territory; Airbus slid over 5%
LONDON — European markets opened the final month of the year on a subdued note, with the pan-European Stoxx 600 index closing Monday's session 0.2% lower. Major bourses and most sectors traded in negative territory, extending the cautious sentiment that characterized November amid concerns over AI valuations and monetary policy uncertainty.
Investor focus remains firmly on central bank outlooks. Markets are pricing in an 87.4% probability of a 25-basis-point rate cut from the U.S. Federal Reserve at its December 9-10 meeting, according to the CME FedWatch Tool. This expectation is influencing policy considerations globally.
In an exclusive interview with CNBC, Bank of England Monetary Policy Committee member Megan Greene highlighted the external pressures facing the U.K. central bank. "About half the moves in our curve actually are generated entirely outside the U.K.," Greene stated, acknowledging the significant influence of U.S. monetary policy. The BOE has not committed to a December rate cut, citing persistent inflation risks, elevated wage growth, a softening labor market, and stagnant consumption.
Greene noted that while recent deflationary measures in the Autumn Budget on energy and rail fares may offer short-term consumer relief, the BOE must "look through that" to ensure medium-term price stability. She identified weak consumer spending as a critical challenge, contrasting the U.K.'s consumption level—just 1% above pre-pandemic figures—with the U.S., where consumption is about 15% higher.
Sector performance was mixed. European defense stocks declined as investors monitored developments toward a potential Ukraine peace deal. Rheinmetall slipped 2.2%, while Renk dropped 4.7%. Conversely, precious metals miners advanced as gold prices hit a six-week high. Fresnillo led gains, rising 7%.
In corporate news, Airbus shares fell 5.8% after the manufacturer urgently updated flight software for its A320 fleet over the weekend due to concerns about solar radiation potentially corrupting flight data. Widespread travel disruptions were largely avoided.
Asian markets opened December mixed following data showing an unexpected contraction in China's factory activity for November. U.S. stocks also traded lower as investors looked to close out a strong 2025.
