European Stocks Face Identifiable Obstacles

European stocks experienced their worst quarterly performance in over two years due to uncertainties around interest rates and U.S. policies. The STOXX 600 showed modest growth by the year's end but was on track for a quarterly decline of 3.4%. Meanwhile, major U.S. indices posted strong gains.

European stocks appeared headed for their worst quarterly performance in more than two years, primarily due to uncertainties surrounding interest rates and policies from the Trump administration. These factors halted rallies that had previously driven markets to record highs throughout the year.

The pan-European STOXX 600 index edged up by 0.1% during the final trading session, yet it was poised for a quarterly decline of 3.4%—the largest since July 2022. Trading activities were minimal with major markets such as Germany, Italy, and Switzerland already closed, while France, Spain, and the UK prepared for early closures.

Senior equity analyst Matt Britzman from Hargreaves Lansdown noted that global trends showed investors pulling back positions due to uncertainty over monetary policy and the economic landscape under Trump. While U.S. markets saw robust gains this year, European and Chinese economic slowdowns along with political turmoil in France stunted the growth of European equities.

(With inputs from agencies.)