European shares weaken; central bank decisions are in the spotlight
European shares traded sluggishly on Tuesday, struggling to gain momentum as investors awaited a major monetary policy decision during the final month of the year.
At 03:05 ET (08:05 GMT), the DAX index in Germany was up 0.1% and the FTSE 100 in the UK was up 0.1%, while the CAC 40 in France was down 0.1%.
Global monetary policy is in the spotlight
European equities traded lower on Monday, a dismal start to December, but were still on track for healthy annual gains, helped by rising expectations that the US Federal Reserve will cut interest rates next week.
Both Germany’s DAX and the UK’s FTSE 100 are on track to rise more than 18% in 2025, while France’s CAC 40 followed with a rise of just 10% as political uncertainty weighs more heavily.
Traders are pricing in an 87.2% chance of a quarter-point Fed rate cut, according to the CME FedWatch Tool, while the Bank of England is also expected to cut rates this month given signs of easing inflation and sluggish growth, especially after tax increases detailed in last week’s Autumn Budget.
Meanwhile in Europe, preliminary eurozone inflation data, due later this session, is expected to show annual inflation just above the European Central Bank’s medium-term target, although this will do little to change the interest rate outlook as markets expect the ECB to keep policy on hold until 2026.
European buybacks will pick up momentum in 2026
In addition to help from central bank policy, analysts at Barclays also see the potential for strong momentum next year in Europe’s corporate sector.
European companies repurchased shares worth €19.3 billion by November 2025, near the peak level since 2017, Barclays said in a note dated Tuesday.
Share buybacks accounted for 2.3% of European equity trading volume in the month, with energy companies and financial institutions generating more than 2.5% of volume through buybacks alone. Fourth-quarter execution has been running above historical averages, analysts said.
An important factor supporting continued power is unexercised capacity. About 70% of the 2026 buyback program is still underway, while Barclays’ probability model projects around €50 billion of new announcements in the first quarter.
Barclays estimates earnings per share growth of 8% for European equities in 2026. Automotive manufacturers, telecom operators and energy companies currently offer the highest free cash flow returns among sectors.
Crude oil prices are slightly higher
Oil prices remained positive on Tuesday, as Ukraine’s peace hopes remained fragile, tensions rose between the US and Venezuela and a group of major producers raised production levels.
Brent futures rose 0.1% to $63.20 a barrel, and U.S. West Texas Intermediate crude futures rose 0.2% to $59.41 a barrel.
Both benchmarks rose more than 1% on Monday, with the WTI contract near a two-week high.
Ukrainian President Volodymyr Zelenskiy said on Monday that Kiev’s priority was defending sovereignty and ensuring strong security guarantees, adding that territorial disputes remained the most complex issue.
US envoy Steve Witkoff is due to brief Russian authorities on Tuesday, but the four-year conflict is unlikely to end soon.
Tensions between Washington and Caracas also increased after US officials signaled they might tighten restrictions on Venezuela, seen as having the world’s largest oil reserves, including closing their airspace.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, reiterated a slight increase in oil output for December but also paused an increase in the first quarter of next year due to growing concerns about oversupply.
Source: Investing.com
