European stock markets achieved an unprecedented historical milestone at the close of trading on Monday, with major indices soaring to new record highs, driven by a strong buying spree primarily focused on defense and armament stocks. This investment momentum came as a direct reaction to escalating geopolitical tensions following the US military strike on Venezuela, which has reshaped the landscape of risks and opportunities in global markets.
Historical figures break down psychological barriers
In a first-of-its-kind achievement, the Stoxx Europe 600 index, which tracks the performance of the largest companies in Europe, broke the 600-point barrier, closing 0.95% higher at 601.76 points. This wasn't the only significant gain; the London Stock Exchange also witnessed an exceptional event, with the FTSE 100 index closing above 10,000 points for the first time in its history, rising 0.54% to reach 10,004 points and overcoming a long-standing psychological and technical barrier.
The German and French markets were not immune to this strong performance; the German DAX index ended the session at a new historic high, achieving gains of 1.35% to reach 24,868 points, while the French CAC index increased by 0.2% to close at 8,211 points.
Geopolitical tensions are boosting the defense sector
Recent military developments played a key role in this surge, with the US attack in Venezuela driving investors toward the "crisis haven" of defense companies. The defense sector index jumped by a remarkable 3.25%, reaching its highest level in two months. This rise reflects market expectations of increased military spending and demand for defense equipment amid geopolitical uncertainty.
Technology and mining revival
Alongside the defense sector, other vital sectors also saw significant activity, contributing to the record gains of European indices. The technology sector led the gainers with a strong rise of 3.75%, reflecting investors' continued appetite for risk and growth stocks despite the tensions. The mining sector index also climbed 2.3%, supported by expectations of rising commodity and metal prices, which are often positively affected by international disruptions and supply chain issues.
Economic indicators and future projections
Economic analysts believe that the record highs reached by European indices, particularly the FTSE and STOXX 600, reflect the strength of market liquidity and its ability to absorb geopolitical shocks and transform them into sectoral investment opportunities. However, attention remains focused on developments in Venezuela, where any further escalation could lead to sharp market volatility, even though the current general trend indicates a dominance of buying sentiment, supported by the performance of major companies.
