Energy, mining stocks lead gains in Europe’s holiday-thinned trade

FRANKFURT: Europe’s main stocks index rose on Tuesday, with mining and energy stocks leading gains amid light trading volumes ahead of the Christmas break.

The pan-European STOXX 600 was up 0.2%, with many markets either shut or working reduced hours for Christmas Eve.

Most European markets will be closed for the next two days.

With just a few more days to the New Year, investors are looking out for any developments related US President-elect Donald Trump’s White House inauguration on Jan. 20. Trump has threatened import tariffs against crucial economies including China and Mexico.

The incoming president’s expected policies are considered inflationary and have already been factored in the Federal Reserve’s monetary policy outlook. The European Central Bank, which has delivered back-to-back rate cuts this year, flagged prospective trade tensions with the US under Trump.

“Our relatively optimistic take on Germany rests on an assumption of limited new US trade restrictions vis-à-vis Europ,” Morgan Stanley analysts said in a weekly note. “Spain is likely to continue its outperformance of the euro area. For one, it is less trade dependant than other euro area economies.” Despite hitting record highs this year, the STOXX 600 is up just around 5% so far in 2024, with momentum stalling in the face of Trump’s proposed measures, lacklustre Chinese spending, geopolitical tensions and a weak domestic economic picture, among other factors.

The auto sector, expected to be the worst-hit under Trump, is set to be the top laggard of the year, while defence and banks are on track to be the biggest gainers.

On the day, basic resources index, which includes most of Europe’s mining firms, rose 0.6%. Energy, too, was up 0.4%, tracking higher oil prices.

Among individual movers, British homebuilder Vistry slumped 16.3% after warning on its fiscal 2024 profit for the third time, citing delays to expected year-end transactions and completions.

Elsewhere, France unveiled a new government that Prime Minister Francois Bayrou will hope can oversee the passage of a 2025 budget and prevent a deepening of crisis. The CAC 40 was last up 0.1%.