Markets slip at the start of the month despite strong seasonality, as investors weigh Fed rate cuts, geopolitical shifts, and cooling China data.
MARKET INSIDER – European markets opened the final trading month of 2025 in negative territory, with the Stoxx 600 falling 0.3% early Monday after November’s turbulent mix of AI valuation fears and monetary-policy uncertainty. The downside move marks a cautious start to a month that historically delivers strong gains, even as traders increasingly expect the U.S. Federal Reserve to cut rates at its December 9–10 meeting. Futures markets now price in an 87.4% chance of a quarter-point cut.
Defense stocks bore the brunt of the selling pressure. Shares of Rheinmetall dropped 2.4%, Renk slid 3.8%, and Hensoldt fell 3.2% as investors reacted to renewed diplomatic momentum toward a Ukraine peace deal. U.S. Special Envoy Steve Witkoff is traveling to Moscow this week for talks with President Vladimir Putin, following Ukraine’s preliminary approval of a revised U.S.-backed 19-point plan. Secretary of State Marco Rubio described additional talks in Florida as “very productive,” though he acknowledged more work remains.
The geopolitical shift dragged on Europe’s defense complex but lifted other corners of the market. Precious metals miner Fresnillo jumped 3.1% as gold hit a six-week high, with spot prices rising to $4,251.22. Anglo American and Glencore also gained in early trade, supported by renewed demand for safe-haven assets. Meanwhile, Airbus shares slipped 2.1% after the company rushed software updates across its A320 fleet amid concerns that solar radiation could corrupt flight-control data—though major travel disruptions failed to materialize.
Globally, sentiment remained mixed. Asia-Pacific markets were divided after new data showed an unexpected contraction in China’s November manufacturing activity, adding fresh uncertainty to the region’s recovery trajectory. In the U.S., stock futures steadied after a winning week, with seasonal trends favoring further gains: December has historically delivered an average S&P 500 increase of more than 1%, making it one of the index’s strongest months since 1950.
With no major corporate earnings or economic data scheduled in Europe on Monday, investors are left to navigate a market shaped by geopolitics, central-bank expectations and lingering concerns about the durability of 2025’s AI-powered rally. The early December pullback poses the key question: will seasonality and a likely Fed pivot revive the year-end rally—or will geopolitical shifts keep Europe on the defensive?
