European stocks edged closer to a record as investors cheered falling oil prices and signs of reduced geopolitical tension. The Stoxx Europe 600 Index climbed 0.4% to 652.09 points, just a fraction short of the 652.77 high set in mid-July.
Retail and consumer gains lead the charge
Consumer products and retail shares were among the top performers. Germany’s DAX and the Euro Stoxx 50 also touched fresh peaks, while energy stocks fell as oil prices dropped. Iran reportedly made progress in talks to ease shipping blockades at the Strait of Hormuz, a move that followed U.S. President Donald Trump’s decision to cancel a planned military strike. The improved sentiment and easing of tensions helped push the European market toward new highs, with key indexes showing renewed strength. However, energy stocks struggled, weighed down by the decline in oil prices, which benefited the broader market.
Earnings drive the momentum
Bloomberg Intelligence data show MSCI Europe companies are set to report a stronger-than-expected 14% rise in second-quarter earnings. Violeta Todorova, senior research analyst at Leverage Shares, called it a surprise for investors. Defense budgets, fiscal spending, and rebounding manufacturing activity, she said, are all lifting corporate profits. The analyst noted that the healthier-than-anticipated earnings revision cycle has supported the market's upward move, especially as corporate profits across the region show a stronger recovery than forecasted at the start of the year.
AstraZeneca Plc shares plunged 9% after reports surfaced that the British drugmaker considered buying Bristol Myers Squibb Co. The regional benchmark, up 1.7% since mid-July, has outpaced the S&P 500. Investors closely watched the market’s performance, with strong company results and improved economic conditions contributing to a broader resurgence in European equities.
Investors also tracked individual stock moves, including a sharp drop for AstraZeneca following acquisition rumors. The European stock market remains in focus as companies continue to report results and as global tensions appear to ease. The performance of the Stoxx 600 has reflected the region’s growing confidence, with expectations for continued earnings momentum likely to keep the market on an upward trajectory. European stocks traded steady near a record high as falls in HSBC Holdings Plc and Novo Nordisk A/S helped erase early gains. The Stoxx Europe 600 Index was little changed by the close after earlier rising as much as 0.5%. HSBC shares fell 4.7% following broker downgrades and a report that China has expanded its personal income tax to include any returns from insurance policies in Hong Kong. Prudential Plc dropped 6.4%. Novo declined 4.3% after sales of the new Wegovy weight-loss pill failed to top analysts’ expectations.