European market performance overview with EU stars, euro symbol, and financial growth charts indicating inflation trends and sector analysis. Image Credits: Kencrave
European Markets Weekly Analysis (Dec 1 To 10, 2025): Inflation At 2% Target, Sector Moves, Fear & Greed Index, And Key Ecb Catalysts Ahead
European markets entered December with inflation trending near the ECB’s 2% target, reinforcing expectations of a steady policy stance. The European Commission’s Autumn 2025 forecast highlighted modest growth resilience despite trade frictions, while LGT’s December outlook noted euro area inflation stability contrasted with weaker Swiss growth.
Sentiment indicators such as the MacroMicro European Fear & Greed Index showed mixed readings, reflecting cautious optimism amid disinflation and stable credit conditions.
Cyclicals: Autos and industrials showed selective strength which means that gains were not broad-based across all cyclicals, but concentrated in pockets where order books, export demand, or pricing power remained resilient.
Rates & credit: Sovereign yields stabilized as inflation cooled; credit spreads remained contained.
FX: The euro traded in tight ranges after CPI data confirmed stability.
European macroeconomic drivers
A pie chart - European macroeconomic drivers breakdown by category and impact share (Dec 1–10, 2025).
Label: Allocation reflects typical market focus around calendar-flagged releases and policy events that carry higher volatility impact in European trading. Source: ECB – Macroeconomic Projections
Key Insights from Chart: European Macro Drivers Breakdown (Dec 1–10, 2025)
Inflation prints (30%) are the top macro driver, followed by central bank decisions (25%).
PMIs and industrial data (20%) and labor/earnings (15%) also play significant roles.
Credit spreads/liquidity (10%) are the least influential in this period.
Implications ofEuropean Macro Drivers Breakdown:
Market sensitivity to inflation and ECB signals remains high, any deviation from expected CPI/HICP or hawkish/dovish tone could trigger volatility.
Industrial and labor data are gaining relevance, suggesting investors are watching real economy indicators more closely.
Liquidity concerns are subdued, indicating stable credit conditions for now.
European Market Fear & Greed Index snapshot
Bar chart – European Fear & Greed Index comparison for Eurozone, Germany, France, and UK (Dec 1–10, 2025).
Label: Higher bars = more “greed” (optimism); lower bars = more “fear” (pessimism). Source: MacroMicro – European Countries Fear & Greed Index
Key Insights from the Chart : European Market Fear & Greed Index snapshot
Germany (60) shows the highest investor optimism ("greed").
Eurozone (50) sits at neutral sentiment.
France (40) and UK (30) reflect rising investor caution or "fear."
Implications ofEuropean Market Fear & Greed:
Germany’s bullish sentiment may drive short-term equity inflows and sector rotation into growth stocks.
UK’s elevated fear suggests potential capital outflows or defensive positioning, possibly due to macro uncertainty or political risk.
Divergence across regions highlights the need for country-specific strategies rather than a pan-European approach.
Quick takeaways
Disinflation supports stability: Inflation near target underpins predictable ECB policy.
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