Europe midday: Shares slip into red ahead of Trump ascension

(Sharecast News) - European markets slipped into the red as the world braced itself for the inauguration of Donald Trump as US President, with investors waiting to see whether he will follow up with his threat to impose large tariffs, among other economic policies.

The Stoxx 600 index was down 0.13% at 522.9 in early trade with all major regional markets higher. US markets are closed for Martin Luther King day. Britain's FTSE 100 hit a fresh intra-day high before settling back to be 0.11% higher.

Trump has threatened China, Canada and Mexico with high duties on imports, threatening to start a global trade war, which analysts say could push the price of goods in the US higher as inflation is stoked. The president-elect on Sunday said he planned to sign around 100 executive orders on the first day of his second term.

Traders are also watching the annual the World Economic Forum talkfest in Davos, Switzerland, this week.

"A good part of Trump trade has already happened - the small and mid-caps rallied, energy and financials outperformed and cryptocurrencies touched the sky. Therefore, the first week under Trump may not bring a lot of surprises...but it may as well!," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"But beyond that optimism, Trump policies are expected to be a double-edged sword. His pro-growth policies and deregulation are expected to benefit to the US economy but his tariff policies will certainly lead inflation higher and soften the Fed doves' hands for easing policy. In addition, exploding debt levels will likely further push the borrowing costs higher."

In economic news, China's central bank kept key lending rates unchanged for the third month in a row.

Construction output in the eurozone increased by the most in 19 months in November, according to figures out on Monday from Eurostat.

Seasonally adjusted production in construction across the single-currency region was 1.2% higher over the month, following a revised 0.8% gain in October. That was the strongest monthly growth seen since February 2023.

Meanwhile, German producer prices rose 0.8% year-on-year in December, according to Destatis, for a second consecutive annual increase.

During December, capital goods prices rose 1.8% year-on-year, while machinery costs increased 2%, non-durable consumer goods prices advanced 2.6% and durable consumer goods ticked up 1% year-on-year.

On the equities front, shares in Belimo Holding advanced 2.6% as the Swiss heating and ventilation products maker reported annual revenue above market expectations.

Reporting by Frank Prenesti for Sharecast.com