European shares edged higher on Monday, reaching nearly a three-month peak, bolstered by gains in banking and travel stocks as markets awaited the inauguration of Donald Trump as the
45th U.S. president.
The pan-European STOXX 600 index rose 0.1% as of 0952 GMT, building on a more than 2% gain recorded over the previous week. U.S. markets were closed for Martin Luther King Jr. Day, leading to reduced trading volumes across European exchanges.
Trump's swearing-in, scheduled for 12:00 pm ET (1700 GMT), has drawn global attention, with investors anticipating his initial executive actions on immigration, energy, and tariffs. "Nobody really knows what he will be willing to do and how far he will go," remarked Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
European markets are caught between optimism about global growth and concerns over potential financial tightening and Trump's unpredictable policies. Analysts believe his protectionist trade measures could spur inflationary pressures in both the U.S. and Europe. "There is hope that Trump will soften his tone after an initial punch, making his presidency less disruptive than feared," Ozkardeskaya added.
The banking sector outperformed, gaining 0.7%, followed by a 0.4% rise in the travel and leisure sector. Utilities lagged behind, falling 1.1% and capping broader market gains.
In economic data, German producer prices increased by 0.8% year-on-year in December, falling short of expectations. Meanwhile, European Central Bank (ECB) policymaker Robert Holzmann cautioned that cutting interest rates in response to a temporary spike in inflation could damage the ECB's credibility. The ECB is expected to lower rates by 0.25% at its upcoming meeting on January 30.
The annual World Economic Forum (WEF) in Davos, Switzerland, also looms large on investors' radar as key political, business, and financial leaders gather to discuss global challenges.
Among individual stocks, industrial technology firm Hexagon advanced 1.3% after naming Anders Svensson as its new CEO. Svensson is transitioning from his CEO role at Konecranes, whose shares fell 4% on the news. Siemens Energy slipped 2.1% following a UBS downgrade to "sell."
On the upside, Swiss heating and ventilation company Belimo Holding gained 2.8% after reporting full-year revenue that exceeded market expectations.
As markets await further clarity on Trump's policy direction and other global developments, European equities remain in a cautious but optimistic stance. Photo by Gage Skidmore from Peoria, AZ, United States of America, Wikimedia commons.