LONDON — European stocks closed slightly lower on Monday as global investors focused on the U.S. Federal Reserve’s monetary policy decision this week.
The pan-European Stoxx 600 provisionally ended the session 0.07% lower, with major regional bourses and sectors mixed, at closed at 4:30 p.m. in London (11:30 a.m. ET).
The Fed is widely expected to cut its key interest rate at its final meeting of the year, with traders pricing in around an 87% chance of a 25-basis-point cut this Wednesday when the central bank concludes its two-day meeting, according to the CME FedWatch tool.
The Fed’s decision will set the scene for other central banks, which will hold their final policy meetings of the year this week and next. The Swiss National Bank will deliver its latest policy update on Thursday, and next week we’ll get rate decisions from the Bank of England and European Central Bank on Dec. 18.
The jury is still out as to whether the BOE will cut its base rate when it meets, but the ECB is widely expected to hold rates steady. The Bank of Japan is also set to hold its last policy meeting of 2025 on Dec. 19.
Defense stocks Renk, Rheinmetall and Hensoldt were all up. The names moved 5.5%, 3.6% and 2.2%, respectively. The Stoxx 600 Aerospace and Defense index was 1.6% higher at close.
It comes as Citi upgraded Renk from neutral to buy.
“We continue to expect European defense spending will continue to increase, regardless of the resolution of the conflict in Ukraine as Europe aims to deter aggression by strengthening its military capabilities,” analysts at the investment bank said in a note.
Citi’s perspective is driven by Europe’s U.S.-encouraged increase in defense spending, which it does not see changing “irrespective of which party is in the White House.” It also noted an EU-wide mutual defense clause that Citi expects will play a role in the cohesion of the EU and commitments made to NATO.
Over the weekend, U.S. President Donald Trump’s outgoing Ukraine envoy Keith Kellogg said a deal to end the Ukraine war was “really close.” The two main sticking points are the future of Ukraine’s Donbas region and the Zaporizhzhia nuclear power plant.
“If we get those two issues settled, I think the rest of the things will work out fairly well,” Kellogg said on Saturday. “We’re almost there.”
Tech names were also among Monday’s movers. Dutch chip-related names BESI and ASMI gained 5.2% and 6.9% respectively, as AI continues to gain traction. Shares in ASML closed 1.2% higher.
In corporate news, Unilever’s spinoff ice cream business made its pubic debut on Monday. The Magnum Ice Cream Company, which includes Magnum, Ben & Jerry’s, Wall’s and Cornetto, has a reference price of 12.80 euros ($14.93) in the company’s primary Amsterdam listing. The stock opened at 12.20 euros, slightly below its reference share price of 12.80 euros. It closed at 12.97 euros.
“We became the global leader in ice cream as part of the Unilever family,” the new entity’s CEO Peter ter Kulve said Monday ahead of the debut. “Now, as an independent listed company, we will be more agile, more focused, and more ambitious than ever.”
Unilever traded 4% lower in early dealmaking but closed just under 2% down.
Shares in French cosmetics brand L’Oreal closed around 2% down after news that it will increase its position in U.S. skin care company Galderma to 20%, up from 10%.
Elsewhere, Elon Musk has called for the European Union to be abolished after the bloc fined his social media company X 120 million euros for a “deceptive” blue checkmark and lack of transparency of its advertising repository.
Overnight, Asia-Pacific markets traded mixed as investors assessed data that showed China’s exports jumped more than expected in November. U.S. stock futures were near flat on Sunday night. U.S. markets received a boost on Friday after the delayed release of September’s core personal consumption expenditures price index came in softer than economists anticipated.
That was one of the last major economic releases ahead of the Fed’s policy gathering taking place this week.
— CNBC’s Alex Harring and Kai Nicol-Schwarz contributed to this market report.
