16.12.202517:00:12UTC+00EU Stocks Pressured by Defense Sector

European stocks retreated on Tuesday, with the STOXX 50 declining by 0.5% and the wider STOXX 600 dropping by 0.4%. This downturn came as investor optimism surrounding Russia-Ukraine peace negotiations prompted a reevaluation of military spending projections, adversely affecting defense-related shares. Significant losses were observed within the defense sector, with Rheinmetall falling 4.6%, BAE Systems declining 1.7%, Leonardo slipping 3.9%, and Thales dropping 1.6%. Technology giants also exerted downward pressure on the market, as ASML Holding fell by 2.1% and SAP decreased by 1.4%, amid signs of subdued global growth that lessened the appeal for cyclical technology investments. Conversely, LVMH stood out positively, climbing 1.7% due to the relative strength in luxury demand. On the economic front, preliminary PMI data painted a mixed picture, highlighting a slowdown in eurozone private-sector activity as both services momentum and manufacturing performance waned—particularly in Germany—with France experiencing a sharper-than-expected deceleration in its services sector.