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European Stocks Fall as Traders Weigh Trump Policies, ECB Cuts

Allegra Catelli

18 November 2024 at 11:48 am·2-min read

(Bloomberg) -- European stocks slipped on Monday amid worries around Donald Trump’s policies and as traders trimmed the odds of European Central Bank’s rate cuts.

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The Stoxx Europe 600 Index closed 0.1% lower, after ending last week with its fourth straight week in the red — the longest losing streak for the index since 2022. Real estate stocks, retailers and utilities were among the biggest laggards, while higher iron ore levels boosted mining stocks that led the gains in the index.

European stocks have been trending lower since Donald Trump’s election victory, with traders concerned about potential tariffs and other policies under the new administration. Morgan Stanley strategists led by Marina Zavolock today downgraded their stance on European stocks to neutral.

Traders have also pared back rate cut bets in Europe, with Governing Council member Gabriel Makhlouf saying there’s no rush to lower interest rates at a faster pace. Money markets are currently betting on 29 basis points of ECB rate cuts in December and 138 basis points by the end of 2025, slightly lower odds compared to last week.

“There is very broad negative sentiment toward European assets — both stocks, rates and FX. Economic activity is slowing, earnings are being downgraded, Chinese demand — a crucial driver for Europe’s economy — is slow. Proposed tariffs are adding to already difficult situation, adding insult to injury,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.

Read: Counting on Earnings Recovery Next Year Is Risky: Taking Stock

Among single stocks, Bavarian Nordic A/S, one of a few companies with an approved mpox vaccine, rose after an analyst upgrade. Shares in B&M European Value Retail SA were among the biggest laggards after the discount retailer had its earnings estimates and price target lowered by analysts.

For more on equity markets:

Counting on Earnings Recovery Next Year Is Risky: Taking Stock
M&A Watch Europe: Grifols, WPP, Enel, Endesa, Bouygues, Segro
US Stock Futures Little Changed

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--With assistance from Kit Rees.

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©2024 Bloomberg L.P.

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