European stocks experienced a downturn on Monday, with most markets retreating after a streak of gains. This decline was primarily driven by a sell-off in technology shares, fueled by apprehensions regarding the burgeoning Chinese AI startup, DeepSeek, and its potential impact on sector earnings.
Additionally, uncertainties surrounding U.S. President Donald Trump's tariff policies and anticipation of interest rate decisions by the Federal Reserve and the European Central Bank further weakened market sentiment.
The pan-European Stoxx 600 dipped by 0.07%. Germany's DAX and France's CAC 40 fell by 0.53% and 0.27%, respectively. The U.K.'s FTSE 100 saw a marginal rise of 0.02%, while Switzerland's SMI recorded an increase of 1.05%.
Elsewhere in Europe, markets in Austria, Finland, Iceland, the Netherlands, Poland, Portugal, Russia, Sweden, and Turkey showed weaker performances. Conversely, markets in Belgium, Denmark, Ireland, Norway, and Spain closed on a positive note.
In the UK, mining stocks notably underperformed after data indicated a contraction in the manufacturing sector of the world's largest economy. China's National Bureau of Statistics reported that its manufacturing sector slipped into contraction in January, with the PMI dropping to 49.1, below the anticipated 50.1 and the previous month's score.
Anglo American Plc plunged by over 6%, influenced by reports of BHP Group's decision to pause its acquisition bid due to a recent surge in Anglo American's stock prices. Glencore, Antofagasta, Endeavour Mining, and Fresnillo experienced losses ranging from 2% to 4%, while Rio Tinto declined by 1.7%.
Several notable companies, including Scottish Mortgage, JD Sports Fashion, Rolls-Royce Holdings, Ashtead Group, Halma, ICG, Diploma, IMI, F&C Investment Trust, Centrica, Kingfisher, 3i Group, Barclays Group, Smiths Group, Shell, IAG, Standard Chartered, and Lloyds Banking Group, also registered significant declines.
On the upside, British American Tobacco rose by about 4% as the Trump administration retracted a plan to ban menthol cigarettes in the U.S. Ryanair also gained over 2% following its better-than-expected quarterly earnings report.
Other gainers included Convatec Group, GSK, Airtel Africa, Unilever, Croda International, and Hikma Pharmaceuticals, which advanced between 2% and 4%. Reckitt Benckiser, Rentokil Initial, Hiscox, Schroders, British Land, Unite Group, and Entain closed notably higher.
In Germany, Siemens Energy plummeted by more than 20%, affected by its significant role in supplying electrical hardware for AI infrastructure. Siemens declined by approximately 3.7%, while Infineon, HeidelbergCement, Rheinmetall, SAP, and Puma fell by 1% to 2%.
Conversely, Brenntag, Symrise, Zalando, Bayer, BMW, Vonovia, Beiersdorf, and Porsche gained between 2% and 4%. Hannover Rueck, Deutsche Telekom, Volkswagen, Munich RE, Mercedes-Benz, E.ON, Allianz, Continental, and Deutsche Boerse advanced between 1% and 1.6%.
In France, Schneider Electric dropped by more than 9% and Legrand fell by about 6.7%. Saint Gobain and Capgemini lost 1.6% and 1.25%, respectively.
On the other hand, Vivendi surged by over 6%, with LVMH, Eurofins Scientific, Kering, Danone, Teleperformance, Unibail-Rodamco, Carrefour, Air Liquide, Orange, Stellantis, and L'Oreal gaining between 1.4% and 2.3%. Sanofi, Vinci, AXA, Publicis Groupe, BNP Paribas, and Societe Generale also ended significantly higher.
Economically, a report from the Ifo Institute indicated that Germany's business climate indicator inched up to 85.1 in January from 84.7 in December. The current conditions index rose to 86.1 from 85.1, surpassing forecasts of 85.4, while the business expectations sub-index dipped slightly to 84.2 from 84.4, aligning with expectations. The Ifo President noted improvements in the services sector, though manufacturing saw continued decline, reflecting persistent stagnation in the German economy.
