European Stocks Hit Record Highs as 2026 Trading Opens with Strong Momentum
European markets began 2026 on a bullish note, with major stock indexes climbing to record highs on Friday as technology and defence shares led broad gains. The rally extended the strong performance seen through 2025, supported by easing interest rates, fiscal stimulus and renewed investor confidence.
STOXX 600 Nears Symbolic 600 Mark
The pan-European STOXX 600 index rose 0.7% to 596.14, coming within four points of the symbolic 600 level. The benchmark also notched its third consecutive weekly advance, maintaining the upbeat momentum that defined the final months of 2025.
Last year, the index recorded its strongest annual gain since 2021, fuelled by lower borrowing costs, Germany’s fiscal stimulus measures, and a rotation of capital away from overvalued U.S. technology stocks. Markets also weathered several shocks, including global tariff tensions sparked by U.S. President Donald Trump’s sweeping trade measures in April.
FTSE 100 Crosses 10,000 Points for the First Time
In London, the FTSE 100 climbed 0.2% to surpass the historic 10,000-point mark for the first time. “From a logical point of view, a milestone of 10,000 is not important, but psychologically it is,” said Nick Saunders, CEO of trading platform Webull UK. “Investors appear confident and are willing to put money into the market despite record highs.”
Across Europe, the German DAX rose 0.2%, France’s CAC 40 gained 0.6%, and the broader region saw strong weekly finishes.
Tech and Defence Stocks Lead Gains
Technology stocks were among the top performers, with ASML surging 7% and boosting the wider sector. Defence shares rose 3.3%, continuing their upward trend amid ongoing geopolitical uncertainty. Energy and resources stocks also contributed to the rally, rising 1.4% and 0.6% respectively, helped by firmer crude and precious metal prices.
“Europe has mostly held on to its gains,” said Steve Sosnick, Chief Market Analyst at Interactive Brokers. “There’s not much company-specific news, but the continued positivity and momentum toward European equities is encouraging. It’s certainly a strong way to start the year.”
Mixed Performance across Sectors
Not all sectors joined the rally. Media stocks slipped 1.2%, extending last year’s underperformance, while real estate shares fell 0.7% amid lingering concerns over high financing costs.
Among individual movers, shares of Danish offshore wind company Orsted rose 4.6% after it announced plans to challenge the U.S. government’s suspension of its $5 billion Revolution Wind project lease.
Economic Data Shows Manufacturing Weakness
Despite the market optimism, euro zone data showed factory activity contracting further in December, with production falling for the first time in 10 months. Economists said the slowdown underlined lingering challenges for the region’s industrial base, even as investor sentiment remained buoyant heading into 2026.
with inputs from Reuters
