Europe close: Carmakers lead rally amid 'fractured' sentiment
By Josh White
Date: Thursday 04 Dec 2025
(Sharecast News) - European shares closed higher on Thursday, with carmakers in focus after US president Donald Trump pledged to roll back environmental standards and allow greater sales of more polluting fossil fuel vehicles.
The Stoxx 600 rose 0.45%, while the DAX gained 0.79% to 23,882.03, the CAC 40 advanced 0.43% to 8,122.03 and the FTSE 100 edged up 0.19% to 9,710.87.
Trump said he would move to slash fuel economy rules imposed by former president Joe Biden, making it easier for automakers to sell combustion engine models in the world's second-largest car market.
Russ Mould, investment director at AJ Bell, said the move shifted attention back onto automotive names and broader market drivers, adding that "this leaves the focus on extended valuations in the technology sector and sentiment seems to be more cautious for now."
Initial jobless claims slower in America, eurozone retail sales flat
In global economics, Americans filed for unemployment benefits at a slower pace in the week ended 29 November, marking a fourth consecutive weekly decline.
Initial jobless claims fell 27,000 to 191,000, well below consensus expectations of 220,000 and the lowest level in three years, according to the Department of Labor.
Continuing claims slipped 4,000 to 1.93 million, while the four-week moving average fell by 9,500 to 214,750.
The data pointed to fewer layoffs even as subdued hiring has kept overall unemployment claims elevated. The insured unemployment rate remained unchanged at 1.3%.
Mould noted that "weaker-than-expected US unemployment data may have further firmed up expectations of a rate cut when the Federal Reserve meets next week," but cautioned that this was "not 'new news' for investors," and that the muted reaction across global markets suggested its ability to drive momentum was waning.
Back on this side of the Atlantic, eurozone retail sales were flat in October, missing forecasts of a 0.1% rise and highlighting a period of stagnation that has persisted for four months.
Food, drink and tobacco sales increased 0.3% and automotive fuel rose by the same amount, but non-food product sales declined 0.2%, offsetting gains elsewhere.
Luxembourg, Estonia and Croatia recorded the largest monthly increases, while Belgium, Austria and Ireland posted the steepest declines.
Year-on-year retail growth strengthened to 1.5% from 1.2% in September.
Patrick Munnelly, market strategy partner at TickMill, said investors remained selective, as UK and European data continued to "point to potential weaknesses" and highlighted that "British investors sold £3bn worth of equities in November, marking the sixth consecutive month of net selling."
In the UK, the construction sector endured its sharpest contraction in more than five years.
The S&P Global construction PMI fell to 39.4 in November from 44.1, marking the lowest reading since May 2020 and signalling a steep slump in activity.
New orders dropped at the fastest rate since the pandemic-era downturn, with firms citing delayed spending decisions ahead of the Budget, weak client confidence and scarce project starts.
Tim Moore, economics director at S&P Global Market Intelligence, said activity "decreased to the greatest extent for five-and-a-half years," with job cuts registering their most pronounced rise since August 2020 and business optimism at its weakest since December 2022.
Munnelly observed that the data "revealed that Britain's construction activity contracted at its fastest pace since May 2020," noting that "the employment index hit its lowest level since August 2020, signalling an uptick in job cuts."
The UK automotive market also faltered.
New car registrations declined 1.6% in November to 151,154 units, marking the sixth fall this year, according to the Society of Motor Manufacturers and Traders.
Private sales slumped 5.5%, although battery electric vehicles continued to gain share, reaching 26.4% of the market despite posting their weakest growth in nearly two years.
The SMMT warned that a planned per-mile tax on electric vehicles could undermine momentum.
Light commercial vehicle sales fell even more sharply, down 22.2%, with changes to fiscal treatment of pickups contributing to a 34.8% drop in the segment.
Carmakers in the green, Hugo Boss falls
In equities, carmakers were among the strongest performers in European equity markets following Trump's emissions announcement, with BMW up 4.1%, Mercedes-Benz Group rising 4.8%, Porsche advancing 4.34%, Volkswagen gaining 2.99% and Stellantis adding 3.58%.
Volvo rose 3.18% after reporting a 10% year-on-year decline in November sales but highlighting continued growth in fully electric vehicles.
Zara owner Inditex climbed 2.66% as it extended gains from strong quarterly results.
On the downside, Hugo Boss fell 1.11% after a sharp drop in the previous session linked to weaker earnings guidance, while Philips slumped 5.66% following comments that raised concerns about its 2026 growth outlook.
Munnelly said that while the FTSE 100 "inched higher ... as investors evaluated corporate updates and economic data pointing to potential weaknesses," sectoral moves remained uneven, adding that "the personal goods sector led market gains, climbing 2.8%," while utilities lagged after Ofgem's grid investment announcement.
Mould agreed that sentiment remained fractured, highlighting Ofgem's pricing dynamic and noting that "the market verdict on Ofgem's decision to approve £28bn of new investment in the energy grid is not overwhelmingly positive."
Reporting by Josh White for Sharecast.com.
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