European shares closed higher on Monday, supported by gains in technology stocks as market sentiment improved on rising confidence that the U.S. Federal Reserve could cut interest rates next month. Investors also monitored developments in the Ukraine peace negotiations.
The pan-European STOXX 600 rose 0.31% to 563.83 points by the close, recovering after posting its sharpest weekly decline since late July.
Positive momentum came largely from Wall Street following dovish comments on Friday by Federal Reserve policymaker John Williams, who suggested rates could be lowered “in the near term.” His remarks strengthened expectations of a potential cut in December, even though Fed officials remain divided due to lingering uncertainty about the state of the U.S. economy.
Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, said optimism had increased after Williams’ comments, noting that U.S. market reactions were helping lift European stocks as well.
Tech Leads STOXX 600 Recovery
Technology shares were the strongest performers, with the sector rising 1.4% after a steep fall in the previous session. AI-linked names led the gains. ASML surged 3.1%, Infineon rose 3%, and Siemens Energy climbed 5.5% after a sharp decline on Friday.
Travel & Leisure and Basic Resources gained about 1.9% each, while construction and materials added 1.5%. Auto stocks rose 1% after Goldman Sachs labeled premium European manufacturers as undervalued. Mercedes gained 0.8%, BMW rose 2.3%, and Stellantis advanced 3.4% following new analyst ratings.
Defense Stocks Slide on Peace Talk Progress
European defense stocks extended their pullback, falling 2.1%, as the United States and Ukraine continued discussions in Switzerland aimed at ending the war. Washington and Kyiv announced they had drafted a “refined peace framework” after revising an earlier U.S. proposal that allies criticized as too favorable to Moscow.
Kathleen Brooks, research director at XTB, noted that the U.S. signaled flexibility on the deal’s terms, suggesting former President Donald Trump’s peace plan could still advance if concessions are made.
Defense stocks have been major contributors to STOXX 600 gains this year due to expectations of rising NATO spending. However, signs of potential progress toward a ceasefire prompted investors to reassess the sector. Shares in Renk, Rheinmetall, Hensoldt, and Saab dropped between 4.3% and 5.6%.
Corporate Highlights Across Europe
Bayer jumped 9.3%—the top performer in the index—after positive early clinical trial data revived hopes for a cardiovascular drug that had suffered a significant setback two years earlier.
In contrast, Novo Nordisk fell 5.8%, its worst decline since mid-October, after its Alzheimer’s drug trial failed to meet its primary objective.
Swiss bank Julius Baer slipped 4.4% after completing a credit review that resulted in additional write-downs.
A survey showed that German business sentiment unexpectedly weakened in November. Investors will also be watching Wednesday’s U.K. budget, as well as key U.S. economic releases throughout the week.
