Europe close: Markets start new month in the red
By Josh White
Date: Monday 01 Dec 2025
(Sharecast News) - European stocks opened December in the red on Monday as geopolitical developments weighed on defence shares and Airbus slumped after issuing an emergency software update across its A320 fleet.
The Stoxx 600 slipped 0.23% to 575.08, with losses across major continental benchmarks.
Germany's DAX fell 1% to 23,597.44 and France's CAC 40 dropped 0.32% to 8,097.00, while the FTSE 100 slipped back into the red by the close, finishing down 0.18% at 9,702.53.
Russ Mould at AJ Bell noted that "the FTSE 100 dipped in early trading on Monday despite post-Thanksgiving gains for US markets last week," adding that cryptocurrency weakness and volatility in Asia suggested a broader "risk-off mood" had emerged.
Investor sentiment softened as talks progressed on a proposed peace agreement to end the Ukraine war.
Arms makers Renk, Rheinmetall, Hensoldt and Thales all declined after Kyiv confirmed it had approved in principle a revised US-backed 19-point peace plan.
American envoy Steve Witkoff was due to arrive in Moscow for discussions with president Vladimir Putin, while further talks in Florida between Ukrainian and US officials, led by secretary of state Marco Rubio, were described as "very productive".
The downturn in defence names came as global risk appetite remained fragile.
Patrick Munnelly at TickMill said "US stock futures and cryptocurrencies saw a decline, signalling a risk-averse sentiment ahead of economic reports set to be released this week," with investors reluctant to take on additional exposure before key macro updates.
Airbus also weighed heavily on the Stoxx 600 after the plane maker warned that solar radiation could affect onboard systems and was forced to roll out an urgent software fix for all A320 jets.
Markets continued to track expectations that the US Federal Reserve would cut borrowing costs when policymakers meet on 9-10 December, with futures now assigning an 87% probability to a 25 basis point reduction.
Munnelly noted that "expectations for a Federal Reserve interest rate cut in December remain robust," and that the central bank's upcoming decisions were a key driver of market behaviour during what he described as a "relatively light week for major economic data."
Russ Mould also highlighted that "there are still hopes the Federal Reserve might announce a rate cut at its upcoming meeting," and that investors were now watching inflation and labour market releases closely "as the market tries to get a read on the Fed's thinking ahead of 10 December."
US data paints mixed picture for global markets
Economic data from the United States painted a mixed picture.
S&P Global's manufacturing PMI eased to 52.2 in November from 52.5 in October, but remained above earlier estimates, pointing to solid output and rising employment despite softer demand and a renewed build-up of inventories.
The Institute for Supply Management's factory gauge, however, contracted for a ninth month, dropping to 48.2 as new orders fell and demand remained weak even as production showed modest resilience.
In the UK, confidence and activity levels across the services sector deteriorated further, according to a CBI survey showing business sentiment at a three-year low and profitability under pressure.
"Business sentiment and activity have continued to fall, while rising costs are outstripping price growth, continuing to squeeze margins," said Charlotte Dandy, economic surveys and data manager at the CBI.
Munnelly said that political and fiscal scrutiny was also shaping domestic market conditions, noting "the fallout from the UK Budget continues as the Office for Budget Responsibility prepares to release its report," and that both the pound and gilts remained "highly sensitive to political developments."
Manufacturing, by contrast, returned to marginal growth.
The S&P Global PMI rose to 50.2 in November, ending a 14-month spell of contraction and supported by firmer domestic demand and softer declines in exports.
Rob Dobson, director at S&P Global Market Intelligence, cautioned that while the improvement was welcome, "any growth is still worryingly weak".
He added that easing cost pressures and competitive pricing had pushed factory gate prices lower for the first time in two years, a trend likely to shift policy debate "away from inflation fears towards supporting economic growth."
UK lending data added to signs of a cautious consumer backdrop.
Mortgage approvals slipped to 65,018 in October but remained above forecasts, while consumer borrowing slowed to £1.1bn, its lowest level in five months.
KPMG separately warned that a weakening labour market and subdued spending would drag GDP growth to 1% in 2026, predicting that employers may increasingly turn to artificial intelligence to cut costs as hiring conditions tighten.
In China, manufacturing momentum faltered unexpectedly.
RatingDog's PMI fell back below the 50 mark to 49.9 in November, reflecting near-stagnant new orders despite stronger overseas demand.
Founder Yao Yu said new export gains were insufficient to drive sustained expansion, adding that manufacturers had scaled back hiring and purchases amid waning business growth.
Munnelly pointed out that despite this weakness, "a boost in metal stocks allowed Chinese markets to commence December positively," even though factory activity remained in negative territory for a prolonged period.
Gold miners provide some shine
Precious metals miners bucked the broader sell-off in Europe.
Fresnillo advanced as gold hit a six-week high, while Anglo American and Glencore also made gains, providing rare strength in an otherwise muted start to the month for regional equities.
Mould said "gold was also higher, helping to lift precious metals miners Fresnillo and Endeavour Mining," attributing buying interest partly to geopolitical tensions and higher oil prices after "Donald Trump's comments around Venezuela and potential military action."
Reporting by Josh White for Sharecast.com.
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