European stocks continued their strong upward trend today, setting new record highs and reflecting a surge in buying momentum across the markets. Major indices successfully broke through key technical and psychological resistance levels. This rally is driven by a combination of geopolitical and economic factors that have reshaped the investment landscape of major portfolios in Europe.
Record performance for the Stoxx 600 index
In a first-of-its-kind move, the pan-European STOXX 600 index rose 0.3%, breaking through the 600-point mark, a psychologically significant level long awaited by investors. This achievement was not a fluke, but rather the culmination of strong gains in key sectors such as defense and energy during previous sessions, providing the necessary support for the index to continue its upward trajectory.
Recovery of the resources and minerals sector
In line with overall performance, the basic resources index recorded a notable jump of 1%, directly benefiting from rising precious metal prices in global markets. Investors typically turn to metals as a safe haven to hedge against inflation and political volatility, which positively impacts the shares of mining and natural resource companies listed on European stock exchanges.
European indices see gains across the board
The gains weren't limited to the pan-European index; they extended to major domestic markets as well. Germany's DAX index rose 0.2%, reaching a new record high, reflecting the strength of the German industrial economy. Spain's IBEX index also climbed 0.4%, hitting a record high as well, indicating that optimism was spreading to Southern European markets.
Geopolitical tensions are a major driver
European stocks had paved the way for this rally with a record close in trading yesterday, driven by a surge in investor demand for defense stocks. This investment trend is a direct reaction to renewed geopolitical concerns sparked by the US military strike against Venezuela. Historically, military conflicts and international tensions lead to increased anticipated government spending on armaments, which in turn boosts the valuations of defense and aerospace companies. Furthermore, concerns about energy supplies have also contributed to the rise in oil and gas stocks.
British FTSE enters the 10,000 club
In a significant development for the British market, the FTSE 100 index closed above 10,000 points for the first time in its history, rising 0.54% to close at 10,004 points. This figure represents a pivotal moment in the history of the London financial market and reflects the attractiveness of internationally influential British stocks, particularly in the energy and banking sectors, which carry considerable weight in the index.
