European Stocks Close at Records

European stocks closed sharply higher at new records on Thursday as the outlook of an improved macroeconomic backdrop lent broad support to the European corporate sector. The Euro STOXX 50 gained 1.2% to 6,355 and the STOXX Europe 600 rose 1.4% to a record of 648. Equities across the world rose after a non-farm payrolls in the US rose only half what was expected, limiting the urgency for tighter policy by the Federal Reserve, and aiding fixed-income assets in economies with exposure to the US. This followed softer inflation in the Eurozone, which supported government bonds in the bloc. UniCredit soared 4% on the final day of its offer period for German lender Commerzbank, while Deutsche Bank added more than 5%. In the meantime, the outlook of lower rates in the US aided luxury giants traded in Paris, with Hermes and LVMH both adding more than 3%. Defense stocks also rallied across Europe, lifting Rheinmetall to close 6% higher.

European stocks traded cautiously on Thursday, with both the STOXX 50 and the STOXX 600 edging up 0.1% only, amid renewed concerns over elevated AI-related valuations. European equities, however, outperformed their Asian and US counterparts, supported by the region's relatively limited exposure to the technology sector. Technology stocks nevertheless came under pressure, with ASML Holding falling 2.3%, Infineon Technologies losing 2%, and STMicroelectronics declining 1%. Other notable decliners included HSBC (-1%), Schneider Electric (-1.3%), and Siemens Energy (-2.8%). In contrast, healthcare stocks advanced, with AstraZeneca (+1.6%) and Sanofi (+1.8%) gaining, while Bayer surged more than 4% after announcing it would consolidate its US Roundup business into a new standalone unit called Ruveon. Elsewhere, LVMH gained 1.6%, UniCredit added 1%, and Sodexo jumped 7% to top the STOXX 600 after raising its full-year organic revenue growth forecast.

European equity markets were set for a subdued open on Thursday as global risk sentiment weakened amid a technology-led selloff, fueled by concerns over the sustainability of the AI-driven rally. Investors also awaited a key US jobs report for fresh clues on the Federal Reserve’s policy outlook after Chair Kevin Warsh said inflation expectations had eased over the past month. Meanwhile, rising oil flows through the Strait of Hormuz and signs of progress in indirect US-Iran talks eased pressure on oil-importing economies worldwide. In Europe, investors will monitor employment data from Spain and Italy, along with France’s budget balance figures, while no major corporate earnings releases are scheduled. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were flat to slightly lower.