Ever have that feeling when the market has been sprinting uphill for days and suddenly… it just stops to tie its shoelaces? That’s exactly where we are this morning in Europe on November 27, 2025.
After four straight sessions of solid gains, the old continent’s major indices are catching their breath. Futures are pointing to a more or less flat open – maybe a flicker higher in Germany and France, a touch lower across the Channel in London. Nothing dramatic. No panic. Just a classic “let’s see what we’ve actually achieved” moment.
And honestly? That feels perfectly normal right now.
A Well-Earned Pause After the Mini-Rally
Let’s rewind twenty-four hours. The pan-European Stoxx 600 closed almost 1.1% higher on Wednesday – its best single-day performance in a couple of weeks. Almost every sector finished in the green, from banks to basic resources. Even the perennial laggards joined the party.
Across the major bourses it was the same story: Frankfurt, Paris, Milan, Madrid – all up between 0.8% and 1.4%. Only London trailed slightly, held back by a stronger pound and some heavyweight miners digesting fresh China stimulus chatter.
So why the sudden enthusiasm earlier this week? Simple. Rate-cut hope.
The Fed Still Holds the Remote Control
Global markets remain completely addicted to the idea that the U.S. Federal Reserve will deliver another quarter-point cut when it meets on December 9-10. According to the latest CME FedWatch numbers, the market is pricing in roughly an 85% probability. That’s down a smidge from 100% a few days ago, but still overwhelmingly the base case.
Lower U.S. rates mean a weaker dollar, cheaper borrowing costs worldwide, and – crucially for European exporters – a more competitive euro. No wonder the DAX, packed with global industrial names, has been leading the charge lately.
“European equities remain highly sensitive to U.S. monetary policy expectations. Every tenth of a percent shift in Fed pricing moves billions in and out of the region.”
– Senior European equity strategist, major Swiss bank
Fair point. And with U.S. markets closed today for Thanksgiving and only open half-day tomorrow, liquidity is about to get thin. That usually amplifies caution.
What the Futures Are Really Telling Us This Morning
As I write this before the European open, the signals are pretty clear:
- UK FTSE 100 futures: –0.1% (barely a sneeze)
- German DAX futures: +0.2%
- French CAC 40 futures: +0.1%
- Italian FTSE MIB futures: flat to +0.15%
In other words, nobody is in a rush to sell, but nobody is piling in either. Classic consolidation.
I actually like these kinds of mornings. They give us time to zoom out and remember why we got excited in the first place – and whether those reasons still hold water.
The Bigger Picture Remains Constructive (For Now)
Let’s be honest – 2025 has been a strange year for European stocks. We spent the first half worrying about energy prices and recession risks. Then summer brought a sharp rebound on cooling inflation and ECB cuts. Autumn wobbled again on U.S. election uncertainty. And now? We’re flirting with all-time highs in several indices.
The Stoxx 600 sits less than 2% away from its record peak set back in late 2021. The DAX actually punched through its own all-time high a couple of weeks ago and hasn’t looked back. Even the much-maligned FTSE 100 is within striking distance of 8500 – a level that felt unimaginable twelve months ago.
So yes, a quiet Thursday feels almost… healthy.
Key Data Points to Watch Today and Tomorrow
There isn’t a packed calendar, but a couple of releases could nudge sentiment:
- German GfK consumer confidence (December reading)
- Eurozone economic sentiment and consumer confidence finals
- Spanish flash CPI – always a bellwether for ECB watchers
None of these are market-movers on their own, but in thin holiday trade they can create ripples.
Longer term, the real fireworks probably start next week when we get the U.S. November jobs report on December 5. That single release has the power to swing December Fed odds from 85% to 50% – or push them back to 100%. European markets will feel every tick.
Sector Rotation Worth Keeping an Eye On
One subtle shift I’ve noticed over the past month: money quietly rotating out of defensive sectors (utilities, staples, healthcare) and back into cyclical areas – especially banks, autos, and basic resources.
European banks, in particular, have been on fire. The Stoxx Banks Index is up more than 35% year-to-date – one of the best-performing sub-sectors globally. Lower rates eventually hurt net interest margins, sure, but right now the macro backdrop (soft landing hopes, steeper yield curves in some countries) is providing tailwind.
Autos have staged a remarkable comeback too, with names like Volkswagen, Stellantis, and BMW up 50-80% from their October lows. Supply-chain healing and surprisingly resilient European car demand are helping, but again – it’s mostly the lower-rate narrative doing the heavy lifting.
Risks That Haven’t Gone Away
Look, I’m not here to rain on anyone’s parade, but markets rarely move in straight lines. A few things still make me pause:
- Valuations are no longer dirt-cheap. The Stoxx 600 trades around 14.5x forward earnings – hardly expensive historically, but a far cry from the 11x we saw in late 2022.
- Geopolitical noise – Middle East, Ukraine, U.S.-China trade chatter – can flare up anytime.
- Earnings growth expectations for 2026 are still quite optimistic (8-10% for the Stoxx). Any disappointment in Q4 reporting season could trigger profit-taking.
In my experience, the most dangerous words in investing are “this time it’s different.” It rarely is.
What I’m Doing Personally
Full disclosure – I’ve been trimming some of the winners that ran hardest in October and early November (especially a couple of German mid-cap industrials that doubled in six months). Not because I think the bull market is over, but because I like banking some profits when sentiment gets this frothy.
At the same time, I’ve been adding selectively to areas that still look reasonably priced – European insurers, certain telecoms, and a handful of quality compounders trading below their five-year average multiples.
Cash levels are a touch above normal, mainly because December often throws curveballs. If we get a 3-5% pullback on thin volume, I’ll be happy to deploy again.
The Bottom Line This Thanksgiving Thursday
European stocks are doing exactly what healthy markets do after a strong run – they consolidate, digest gains, and wait for the next catalyst.
The macro backdrop remains supportive: growth is slowing gently rather than collapsing, inflation continues to cool, and central banks are in easing mode. Corporate balance sheets are rock-solid, and share buybacks keep rolling in.
Could we see a Santa rally into year-end? Quite possibly. Could we also get a nasty pre-Christmas scare if the Fed surprises hawkish? Also possible.
Either way, today feels like the calm before whatever comes next. Enjoy the quiet while it lasts – and maybe use the lull to review your own positions. Markets rarely stay this relaxed for long.
Whatever you’re doing this Thanksgiving (even if you’re nowhere near an American turkey), stay grateful, stay nimble, and keep your eyes on the bigger trend. In the end, that’s what compounds.
