A dream start to the year for European stock markets, which are reaching new all-time highs
A trader stands in front of a screen displaying the chart of the German DAX stock index at the Frankfurt Stock Exchange, PHOTO: Daniel Roland / AFP / Profimedia Images
European share prices rose to a new all-time high on Friday in the first trading session of 2026, continuing the spectacular gains of the previous year, with defense stocks once again leading the way.
Shortly after financial markets opened, the pan-European STOXX 600 index rose 0.6 percent to 596.94 points, holding close to the symbolic 600-point threshold as investors returned to trading after the New Year celebrations. The index was on track for its third straight weekly gain.
The European benchmark ended 2025 with its best performance since 2021 amid falling interest rates, German fiscal stimulus and a shift of capital away from US tech stocks, which have reached prohibitive prices.
Markets have weathered a turbulent year in 2025 from U.S. tariffs, rebounding from annual lows hit in April when President Donald Trump imposed blanket tariffs on U.S. trading partners and sent shockwaves through global markets.
On Friday, the British benchmark FTSE 100 index reached the symbolic threshold of 10,000 points for the first time.
“The main driver is that we have seen commodity prices continue to rise and this is a sector that our clients are very interested in and that shows considerable potential for the year ahead,” said Nick Saunders, managing director of trading platform Webull UK.
“From a logical point of view, the 10,000 mark is not important, but from a psychological point of view it is, because what we are seeing is that investors are willing to put money into the market without the associated fear of hitting all-time highs,” he explained.
Widespread increases in financial markets in Europe
Stocks across the region were mostly in the red, although trading volumes remained light. The market in Switzerland was closed due to the 5-day national mourning decreed after the tragedy in Crans-Montana and will resume its activity next week.
Within the STOXX 600, defense stocks (.SXPARO) posted the biggest gains, advancing 2.4%.
Large-weight bank stocks (.SX7E) also provided support to the market, up 0.8%.
Shares in the basic resources sector ( .SXPP ) rose 1.5%, while the energy index ( .SXEP ) rose 1.4%, tracking the positive performance of precious metals and crude oil prices on the day.
At the opposite pole, shares in the real estate sector (.SXQP) posted losses, falling 0.6%.
The gains in European stock markets come despite economic data showing that eurozone factory activity slipped further into contraction territory in December as output fell for the first time in 10 months.
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