Ever wake up, check the futures, and feel that little spark of optimism? That’s exactly how Thursday is shaping up across Europe right now.
After a mixed session yesterday, the continent’s major indices look ready to push higher at the open. Futures are green across the board, and investors finally have something that feels like genuine tailwinds instead of the usual cocktail of worries we’ve been sipping all year.
A Cautiously Bullish Start to the Day
Let’s start with the numbers everyone checks first thing in the morning. According to early indications, FTSE 100 futures are sitting about 0.3% higher, while both the German DAX and French CAC 40 are signaled to open around 0.6% in the green. Not earth-shattering moves by any stretch, but after months of grinding sideways action, I’ll gladly take it.
Yesterday’s close actually set the stage nicely. The pan-European Stoxx 600 edged up, led by a monster performance from one apparel giant and dragged lower by another. More on that drama in a minute.
Retail Stocks: Tale of Two Fashion Empires
If you want proof that company-specific news still matters more than macro noise sometimes, look no further than Wednesday’s leaderboard.
Inditex, the Spanish powerhouse behind Zara, absolutely crushed it. Nine-month results came in stronger than anyone dared hope, and the stock shot up a clean 10% by the close. Shoppers are apparently still willing to splurge on fast fashion when the designs hit right, even in this economy.
On the flip side, Hugo Boss delivered the mirror-image nightmare. A profit-warning slash guidance cut sent shares down the exact same 10%. Same sector, completely opposite outcomes. That’s why I always say: in uncertain markets, stock-picking matters more than market-timing.
Electric Dreams and American Realities at Volvo
Another name catching attention was Volvo Cars. November sales dropped 10% year-on-year, hardly the headline you want heading into Christmas. Yet management actually sounded upbeat, pointing out that fully electric models were the only segment showing growth.
“Encouraging” was the word the chief commercial officer used for EV demand, though he admitted U.S. sales remain “subdued” after the phase-out of certain tax credits.
It’s the same story playing out across the industry: Europe and China are pulling the EV wagon while the U.S. consumer hits the brakes when subsidies disappear. Something to keep in mind if you’re overweight legacy auto names betting on an American green boom.
Geopolitics Back in the Driver’s Seat
Of course, no European trading day would be complete without the shadow of the Ukraine conflict looming overhead.
Today the spotlight moves to Miami, of all places, where Ukraine’s defense minister is scheduled to meet the new U.S. special envoy. Tuesday’s Russia-U.S. talks apparently ended without fireworks or breakthroughs, so hopes are modest. Still, any sign of de-escalation tends to act like rocket fuel for risk assets on this side of the Atlantic.
Meanwhile, French President Macron is in Beijing trying to convince China to lean harder on Moscow. Good luck with that, but diplomatic activity alone is usually enough to keep buyers interested.
Add in ongoing chatter about using frozen Russian assets as a “reparations loan” for Kyiv, and you’ve got plenty of headline risk to keep traders glued to their screens.
Currency Corner: Euro Flexing Again
Speaking of things that make European investors smile, the euro punched to a fresh seven-week high yesterday, kissing 1.167 against the dollar.
Yes, the dollar has stabilized somewhat since its summer rout, but relative strength in European data and slightly less dovish ECB rhetoric have given the single currency wings lately. For exporters that’s a headwind, but for anyone holding European assets priced in USD? Merry early Christmas.
What’s on the Calendar Today?
We’ve got a lighter data day, but still a few numbers worth watching:
- Eurozone HCOB Construction PMI (expected to tick higher)
- Eurozone retail sales for October
- U.K. new car registrations – another pulse check on consumer confidence
Nothing market-moving on its own, but taken together they’ll help paint whether the recent PMI optimism is spilling into hard data.
The Fed Shadow Looming Larger Every Day
Across the pond, Wall Street futures are basically flat overnight, which feels about right. Everyone is just counting down to the December Fed meeting now.
The CME FedWatch tool currently shows an 89% probability of a 25bp cut – a massive swing from the 50-50 odds we had just a few weeks ago. Markets move fast when they smell easier money.
A December cut is pretty much baked in at this point, but the real question is what Powell & Co. signal for 2026. Three cuts? Four? Pause? That guidance will dictate whether this Santa rally has legs into January or peters out before New Year’s Eve.
Positioning Thoughts Heading Into Year-End
In my experience, December in Europe often rewards patience more than aggression. Windows of opportunity open when U.S. traders go on holiday and volumes dry up, but they slam shut just as quickly.
Right now I’m watching three themes closely:
- Any concrete progress (or breakdown) in Ukraine diplomacy
- Whether the euro can hold above 1.160 into the Fed meeting
- Rotation out of over-loved U.S. megacaps into undervalued European quality names
The third one feels particularly interesting. European valuations still look cheap on almost any metric you choose, and with the currency tailwind, 2026 could finally be the year the Old Continent outperforms again.
Dare I say it? There’s a genuine feel-good factor creeping back into European trading floors this morning. Not the reckless animal spirits of 2021, but the quiet confidence that comes when multiple tailwinds finally line up at once.
Whether it lasts a day, a week, or into the new year, well that’s the multi-trillion-dollar question. But for now, I’m happy to ride the wave and see where it takes us.
Here’s to green screens and maybe, just maybe, a little peace on earth before 2025 draws to a close.
