European stock markets stabilized on Monday following a mixed performance in Asia, as investors awaited fresh indications on the outlook for US interest rates. The dollar generally rose against its main rivals, while precious metals retreated from record highs and oil prices firmed up in quiet post-Christmas trading.
The Federal Reserve’s decision to lower borrowing costs earlier in December has sparked speculation about potential future cuts. The central bank has indicated that it may maintain its current stance when it meets again at the end of next month. The minutes from the last meeting, set to be published on Tuesday, will be closely scrutinized for any hints about the Fed’s plans for 2026.
The prospect of interest rate cuts has contributed to world stock markets reaching multiple record highs this year, offsetting concerns about valuations in the tech sector. According to Victoria Scholar, head of investment at Interactive Investor, “concerns about overvaluations and an AI bubble are likely to continue dominating market chatter into next year.”
In commodities markets, gold and silver slipped after hitting all-time peaks in recent days. The precious metals have seen strong buying due to expectations of further rate cuts, making them more attractive to investors. Geopolitical tensions, including US strikes in Nigeria and a blockade of Venezuelan oil tankers, have also boosted their appeal as safe-haven assets.
On Monday, gold was trading around $4,450 an ounce, having peaked at nearly $4,550 on Friday. Silver slid to $75.64 an ounce after touching a record high above $84. The metal has experienced a sharp run-up in recent weeks, driven by surging demand and tight supply.
Oil prices rose by 2% on Monday, having fallen over 2% on Friday. The increase came as investors eyed a weekend meeting between US President Donald Trump and Ukrainian counterpart Volodymyr Zelensky to discuss peace proposals. Trump stated that a deal to end Russia’s invasion of Ukraine was closer than ever, but no apparent breakthrough was reported on the issue of territory. An end to the war could lead to the removal of sanctions on Russian oil, adding to an already oversupplied market.
Key market figures at around 1130 GMT included the FTSE 100 rising 0.1% to 9,878.07 points, the CAC 40 gaining 0.1% to 8,109.63, and the DAX slipping 0.1% to 24,326.23. The Nikkei 225 fell 0.4% to 50,526.92, while the Hang Seng Index dropped 0.7% to 25,635.23. The euro traded down at $1.1762, and the pound was down at $1.3496. Brent North Sea Crude rose 2.0% to $61.90 per barrel, and West Texas Intermediate gained 2.2% to $57.97 per barrel.