European equities are advancing as strong earnings and easing Middle East tensions improve risk appetite across the region. Lower oil prices and Europe's relatively limited exposure to AI-linked stocks are also helping the STOXX 600 outperform major peers in Asia and the U.S.
Highlights
- STOXX 600 rises 0.3% to 665.38 by 0806 GMT, hitting a record high as Germany's DAX gains 1% to new levels.
- STOXX 600 companies expected to deliver 25% quarterly profit growth, led by energy sector strength and resilient corporate results.
- Europe's smaller AI exposure and lower oil prices drive STOXX 600 up 4.7% this quarter versus S&P 500's 0.4% dip.
Earnings momentum and lower oil support markets
As reported by Reuters, the pan-European STOXX 600 rises 0.3% to 665.38 points by 0806 GMT on Thursday, after closing at record levels in the previous session. Most major regional benchmarks also trade higher, with Germany's DAX up 1% and reaching a new high.European shares are drawing support from resilient corporate results despite pressure from energy-driven inflation and expectations for higher interest rates. According to LSEG-compiled data, STOXX 600 companies are on track to post quarterly profit growth of 25%, the strongest in four years, with energy companies providing a major lift.
Siemens climbs 3.8% after the industrial technology group raises its growth outlook, while Merck adds 1.6% after the drugmaker increases its 2026 profit guidance for the third time this year. Investors are also encouraged by lower oil prices, which fall below $100 a barrel after the U.S. says no imminent attacks on Iran are likely.
Regional positioning boosts Europe's relative performance
Europe's smaller exposure to AI-linked stocks is also helping the region outperform Asian and U.S. markets as traders reassess the AI trade. That positioning advantage comes as investors rotate away from some technology-driven names elsewhere.The STOXX 600 is up 4.7% so far this quarter, while the S&P 500 is down 0.4%. The gap highlights how earnings strength, sector mix and easing geopolitical concerns are combining to support European equities.
We have also discussed the broader context around DAX buying momentum, with the index holding above key moving averages.
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