By Ankika Biswas and Shashwat Chauhan
(Reuters) -Europe’s benchmark stock index erased its initial gains and slipped on Tuesday, led by technology and chemicals, as traders bid adieu to an upbeat 2023 that was fuelled by expectations of nearing interest rate cuts.
The pan-European STOXX 600 was down 0.5% by 1320 GMT, coming off the 23-month high hit intraday, with euro zone government bond yields also on the rise.
Technology lost 1%, dragged by a 2.7% decline in computer chip equipment maker ASML after the Dutch government partially revoked an export licence for the shipment of some of its machines to China.
Chemicals and retail also lost over 1% each.
European markets resumed trading after a long weekend for New Year’s Day holiday.
U.S. stock index futures were also down, looking set for a sombre start to the first trading day of 2024, with investors pondering whether last year’s stellar market gains are sustainable. [.N]
Expectations of softer monetary policy drove a 12.7% jump in the STOXX 600 in 2023, almost fully rebounding from a 12.9% slump in the previous year after major central banks unleashed rapid rate hikes to conquer spiralling inflation.
Italian shares were the top 2023 performers, while Germany’s benchmark DAX and France’s CAC 40 also hit record highs in the previous year.
“There are these expectations that it’s a new year, a new setup, but fundamentally nothing really has changed… Focus remains on economic data and what’s going to happen with central banks and monetary policy,” said Daniela Hathorn, senior market analyst at Capital.com.
The ECB broke its longest streak of rate hikes in its 25-year history in October.
Signs of economic woes were underscored by a survey showing euro zone factories ended 2023 on the back foot, with activity contracting in December for the 18th straight month.
Among major economies, German manufacturing activity continued to contract although expectations for future business turned positive for the first time since April.
Italy’s Monte dei Paschi rose 4% after Economy Minister Giancarlo Giorgetti said in a newspaper interview that the Italian Treasury’s sale of its stake in the bank is proceeding successfully.
The broader eurozone banks index hit its highest level since May 2018 in early trade.
Shipping companies Maersk, Hapag-Lloyd and Frontline climbed between 3% and 5.3% as continued attacks on vessels in the Red Sea lifted investors’ hopes for higher freight rates.
Exchange operator Euronext is experiencing a technical issue causing incorrect index calculation on 212 different indexes that include components listed in Helsinki and Stockholm.
(Reporting by Ankika Biswas in Bengaluru; Editing by Rashmi Aich and Janane Venkatraman)