European Stocks Hit Record Highs, AI Rally Drives Market Gains
European stock markets rallied on Tuesday (June 30th) and closed at record levels, driven by a resurgence in artificial intelligence (AI) stocks. This rise bolstered the European market's performance, which recorded its best quarter since late 2020.
The Stoxx Europe 600 Index rose 0.9% in London, breaking through the crucial 640-point level, an area that had previously been a barrier to gains in recent sessions. Throughout the quarter, the index has gained around 10%, marking its best three-month performance in more than five years.
A rally was also seen across several major regional indices. Spain's Ibex 35 and Italy's FTSE MIB recorded their best quarterly performance in more than five years. This rally indicates that investor interest in European stocks is starting to revive, especially after energy and geopolitical risks have eased somewhat.
The technology sector led the market's advance. ASML shares rose 6.8% and were one of the main drivers of the rally. The rise in technology stocks reflects renewed investor optimism about the AI trade, particularly in companies that play a key role in the chip supply chain and computing infrastructure.
In recent weeks, technology stocks have helped lift the broader European market. Falling energy prices following the US-Iran ceasefire agreement also eased inflation concerns, prompting a shift in funds toward cyclical sectors more sensitive to economic growth.
Investor attention is now shifting to the second-quarter earnings season. Deutsche Bank strategists expect European corporate profits to grow 14%, two percentage points above market consensus. This expectation has further encouraged investors to return to European stocks.
In terms of individual stock movements, Abivax surged 39%, recording its best day in a year. The rise came after a clinical trial update eased investor concerns that cancer could be a potential side effect of the company's lead experimental drug, obefazimod.
Sainsbury's shares also rose 1.3% after reporting first-quarter results. Like-for-like sales excluding fuel rose 2.1% year-on-year. The company maintained its full-year operating profit guidance, despite warning that the impact of the Middle East conflict on the business remains uncertain.
While technology is a leading sector, the market remains wary of risks from tight memory supplies. If prices for chips and technology components continue to rise, this pressure could impact production costs and potentially keep inflation high.
Meanwhile, Teleperformance was the stock with the biggest decline in the index, falling 11.5%. The decline occurred after Concentrix, a similar US company, cut its annual performance outlook. Fishery stocks such as Salmar ASA also remained under pressure after analysts cut their profit forecasts due to lower salmon price assumptions.
Overall, the strengthening of European stock markets indicates that the market is again receiving support from a combination of the AI rally, falling energy prices, and expectations of better corporate earnings. However, investors should still monitor inflation risks from the technology supply chain and the continued impact of geopolitical conflicts on energy costs and corporate business. (arl)
Source: Newsmaker.id
