European equities opened 2026 at fresh record levels on Friday, extending last year’s strong momentum as technology and defence stocks led gains across the region.
The pan-European STOXX 600 climbed 0.7% to 596.14, moving within striking distance of the key 600-point threshold as investors returned from the New Year break. The index also recorded its third consecutive weekly advance.
European markets wrapped up 2025 with their best annual performance since 2021. Falling interest rates, expectations of German fiscal stimulus, and a rotation away from expensive U.S. technology stocks helped fuel the rally.
However, the year was not without volatility. Investors navigated tariff-related shocks and a sharp selloff in April after U.S. President Donald Trump announced sweeping tariffs on global trading partners, briefly weighing on risk sentiment before markets rebounded.
FTSE breaks the 10,000 milestone
London’s FTSE 100 reached the 10,000-point level for the first time, marking a major psychological milestone for investors.
Nick Saunders, chief executive of trading platform Webull UK, said the level itself has little fundamental significance but carries strong emotional weight. He noted that investors appear increasingly comfortable allocating capital even as markets trade at record highs.
Stock markets across Europe closed the week higher. Germany’s benchmark index rose 0.2%, France’s CAC 40 advanced 0.6%, and the FTSE 100 finished up 0.2%.
Within the STOXX 600, shares of ASML surged 7%, lifting the broader technology sector. Defence stocks posted the strongest gains overall, rising 3.3%.
Basic resources stocks added 0.6%, while the energy sector climbed 1.4%, supported by higher precious metals and crude oil prices.
Steve Sosnick, chief market analyst at Interactive Brokers, said European markets have largely held on to their gains despite limited fresh news. He added that ongoing momentum and positive sentiment toward European equities provide a constructive start to the year.
Media stocks were among the weakest performers, falling 1.2% and extending their underperformance from last year. Real estate shares also declined, slipping 0.7%.
In individual stock moves, Orsted shares jumped 4.6% after the Danish offshore wind developer said it was challenging the U.S. government’s suspension of the lease for its $5 billion Revolution Wind project.
On the economic data front, euro zone manufacturing activity moved deeper into contraction territory in December, with factory output falling for the first time in ten months.
