European stocks experienced an uptick on Tuesday, primarily driven by gains within the banking sector. Market participants continued to evaluate the potential actions of Donald Trump, who commenced his second term as President of the United States. His administration initiated a series of executive orders and hinted at the introduction of tariffs on imports from Canada and Mexico.
Simultaneously, investors kept a watchful eye on the developments emerging from the World Economic Forum, which started on Monday in Davos, Switzerland.
The automotive sector faced challenges following Trump's repeal of the previous administration's executive order concerning electric vehicles.
The pan-European Stoxx 600 index saw a rise of 0.4%. The UK's FTSE 100 increased by 0.33%, Germany's DAX advanced by 0.25%, and France's CAC 40 climbed 0.48%. Meanwhile, Switzerland's SMI concluded the session with a 0.61% gain.
Elsewhere in Europe, markets in Denmark, Finland, Greece, Ireland, Poland, Russia, and Sweden closed on a positive note.
Conversely, the Netherlands, Norway, Portugal, and Turkiye recorded downturns, while Austria, Belgium, Iceland, and Spain finished nearly unchanged.
In the UK market, Lloyds Banking Group saw its shares rise by 4%. Other notable gainers included Games Workshop, Endeavour Mining, Airtel Africa, Ashtead Group, AstraZeneca, and Smith (DS), which appreciated between 2.2% and 3.2%.
Among other prominent British entities, BAE Systems, St. James's Place, IAG, Admiral Group, Severn Trent, Barclays Group, Hikma Pharmaceuticals, Fresnillo, Marks & Spencer, and National Grid also closed significantly higher.
However, Pershing Square Holdings, Associated British Foods, and Rightmove experienced declines ranging from 2.5% to 2.8%. Glencore, Haleon, Sainsbury (J), Anglo American Plc, Rio Tinto, and Mondi finished lower by 1% to 1.7%.
In the German market, Siemens Healthineers surged approximately 3.3%, while Siemens Energy rose nearly 3%. Sartorius recorded a gain of 1.8%. Other companies like Merck, Siemens, Rheinmetall, and Henkel also enjoyed robust performances.
Conversely, notable automakers BMW, Porsche, Volkswagen, and Mercedes-Benz saw their shares dip between 0.6% and 1.9%. Deutsche Post, Commerzbank, and Fresenius Medical Care also weakened by the session’s end.
In France, LVMH and Hermès International both recorded gains exceeding 2.5%. Essilor rose around 1.8%, with Eurofins Scientific, Veolia, Dassault Systèmes, and Capgemini marking gains of 0.9% to 1.1%.
Vivendi closed almost 2.5% lower, while Stellantis, ArcelorMittal, Pernod Ricard, TotalEnergies, Carrefour, and STMicroelectronics posted losses ranging from 0.6% to 1.4%.
On the economic front, data from the UK's Office for National Statistics revealed a slight increase in the unemployment rate during the third quarter. Despite high wage growth, a reduction in job vacancies suggests a potential decrease in wage pressures.
The unemployment rate edged up to 4.4% from 4.3% in the September to November timeframe, in line with expectations. Average earnings, excluding bonuses, increased by 5.6% over the three months to November compared to the same period last year, marginally surpassing expectations; earnings including bonuses rose by 5.6% as anticipated.
In Germany, economic sentiment worsened more than forecasted in January. According to a survey by the think tank ZEW, the economy remained troubled for a second consecutive year, with inflationary pressures mounting recently.
The ZEW Indicator of Economic Sentiment decreased to 10.3 from 15.7 in December, underperforming the expected 15.2. However, the appraisal of the current economic landscape showed a slight improvement, with the corresponding index increasing by 2.7 to -90.4, better than the anticipated -93.1.
Data from the European Automobile Manufacturers' Association (ACEA) indicated a rebound in new car sales across the EU towards the year-end, mainly driven by strong growth in Spanish markets.
New car registrations increased by 5.1% year-over-year in December, reaching 910,505 units, thus reversing the 1.9% decline witnessed in November.
Of the four leading markets, Spain exhibited a robust 28.8% growth, followed by France with a modest 1.5% rise. Meanwhile, sales dropped by 7.1% in Germany, and Italy saw a 4.9% decline.
