European Stocks Rally at Start of 2024
European stocks kicked off the new year with gains as oil companies led the charge. The Stoxx Europe 600 Index rose 0.7% at the close of trading in London, with energy producers climbing the most among the 19 industry groups.
Oil Companies Lead the Way
Oil companies were the biggest gainers, with Royal Dutch Shell Plc and BP Plc both rising more than 2%. The two companies are among the biggest beneficiaries of the recent rally in crude prices, which have been driven by a combination of OPEC+ production cuts and optimism about a global economic recovery.
European Markets Outperform U.S.
European markets outperformed their U.S. counterparts, with the S&P 500 Index closing 0.3% lower. The Nasdaq Composite Index dropped 0.5%.
U.K. and German Markets Lead the Way
The U.K.’s FTSE 100 Index rose 0.9%, while Germany’s DAX Index gained 0.8%. France’s CAC 40 Index advanced 0.7%.
Banks and Automakers Rise
Banks and automakers also rose, with Deutsche Bank AG and Volkswagen AG both gaining more than 1%.
Retailers and Travel Stocks Lag
Retailers and travel stocks lagged, with EasyJet Plc and Marks & Spencer Group Plc both dropping more than 1%.
European Markets Rebound After 2020 Losses
European markets have rebounded from losses in 2020, when the coronavirus pandemic sent stocks tumbling. The Stoxx Europe 600 Index is up about 10% since the start of the year, while the S&P 500 Index has gained about 8%.
European Central Bank Stimulus
The European Central Bank has provided stimulus to the region’s economy, including a €1.35 trillion bond-buying program. The ECB has also cut interest rates to a record low of -0.5%.
European Economic Recovery
The European economy is expected to recover in the coming year, with the International Monetary Fund forecasting growth of 4.2% in 2024. The IMF also expects the U.S. economy to grow by 4.3%.
Brexit Negotiations
The U.K. and the European Union are still negotiating the terms of their post-Brexit trade deal. The two sides have until the end of the year to reach an agreement, or the U.K. will face tariffs and other trade barriers.
European Markets Poised for Growth
European markets are poised for growth in the coming year, with oil companies leading the way. Banks and automakers are also expected to benefit from the economic recovery, while retailers and travel stocks may lag. The outcome of Brexit negotiations will also be a key factor in determining the performance of European markets in 2024.