European Stocks Rally as 2026 Trading Kicks Off With Record Highs
European share markets opened the first trading day of 2026 on a strong note, with the region’s key index climbing to unprecedented levels and extending the momentum seen through the latter part of 2025.
The pan‑European STOXX 600 index rose around 0.6%, bringing it close to the psychologically important 600‑point threshold as investors returned from New Year holidays. This advance marked a third straight week of gains for the benchmark, which wrapped up 2025 with its best performance since 2021. Factors behind last year’s rally included lower interest rates, increased German fiscal spending and a rotation out of pricey U.S. tech stocks.
A notable highlight came from the UK market, where London’s FTSE 100 index surpassed the 10,000‑point mark for the first time. While hitting round numbers doesn’t change fundamentals, market participants said it may have positive psychological effects by bolstering investor confidence.
Sector performance across Europe was broadly positive. Defense companies led the gains, with shares climbing more than 2%, while banking, basic resources and energy stocks also showed strong performance. In contrast, property stocks lagged behind, dipping modestly.
In individual stock moves, Danish wind‑energy firm Ørsted saw its shares jump after announcing a legal challenge to the U.S. government’s suspension of its $5 billion offshore wind project.
However, data released alongside the market action painted a mixed picture for the broader economy: euro‑zone factory activity contracted in December, slipping further into negative territory after production declined.
Despite lower trading volumes typical of holiday periods, investor optimism remained intact as European equities kicked off the new year.
