European shares rebounded, recovering from three-week lows, with banks and utilities leading the charge after assessing recent economic data. The STOXX 600 rose 0.7%, bouncing back from a two-day decline.
Key Market Movements
Banks surged by 1.7%, and utilities advanced 1.5%, contributing to the overall market recovery. Healthcare continued its strong performance, rising 1.4% for the fifth consecutive day.
However, the retail sector faced challenges as JD Sports Fashion's profit warning led to a 23.0% drop in its shares. This affected German sportswear giants Adidas and Puma, causing declines of 3.0% and 5.9%, respectively.
Industry-Specific Trends
The technology sector logged its fifth consecutive day of declines, falling by 0.4%. On the data front, German and French inflation met expectations for December, while euro zone business activity contracted at the end of 2023.
Global Economic Outlook
Investors are now focused on the preliminary inflation estimate for the broader euro zone due on Friday. Positive sentiment was bolstered by China's robust services activity and encouraging U.S. economic indicators, including a drop in weekly jobless claims.
Stock Highlights
Individual stock movements included gains for Leonardo after a rating upgrade, and British retailer Next, which jumped 5.8% after revising its profit forecast. In contrast, Evotec faced an 18.3% slump following the unexpected departure of its CEO.
Shipping companies Hapag-Lloyd and Maersk extended gains for a fourth session, rising 14.8% and 4.0%, respectively.
Overall, market observers are considering the sustainability of the previous year's rally, which was driven by expectations of interest rate cuts. The coming year's trajectory will likely be influenced by factors such as inflation trends and global economic risks.