A Santa rally appears to be building in Europe’s financial markets despite concerns about political instability in France and Germany. In London, the FTSE 100 has reached a six-week high, with stocks like easyJet and mining company Antofagasta seeing significant gains. Meanwhile, Germany’s DAX has broken through the 20,000-point mark, and Paris’s CAC 40 has also risen on hopes of more stimulus in China. These gains follow a strong day on Wall Street where the S&P 500 and Nasdaq hit new closing highs.
Despite geopolitical risks, such as the potential collapse of the French government, European markets remain optimistic. In South Korea, however, shares have dropped sharply, with telecoms giant KT Corp and steel manufacturer POSCO both seeing declines. The South Korean currency has also hit a two-year low after President Yoon Suk Yeol declared martial law, citing threats from pro-North Korean forces.
In the UK, concerns about the energy supply margin falling below target have been raised due to low wind speeds affecting renewable power generation. Additionally, the risk premium for France compared to Germany has narrowed, even as the French government faces potential collapse. BBVA’s CEO is still considering whether to sell UK lender TSB if the bank’s bid for Sabadell is successful, as the European Commission has approved the takeover but a longer antitrust review is pending in Spain.
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