European Stocks Hit New Closing High as AI Fever Cools and Earnings Shine

A new peak with miners in the lead

Europe's main equity gauge briefly cleared its August ceiling in early action, then gave back a sliver of the advance, still showing a 0.5% gain by early afternoon in London. Miners were in front, helped by gold's follow through from Wednesday.

The risk tone already improved midweek after Democrats swept the midterm elections, sparking a broad rally. In Paris, IG's chief market analyst, Alexandre Baradez, remarked, "When you look at valuations, Europe is slightly below historic averages, so the record we're seeing today is tied to fundamentals and a pretty good earnings season."

Earnings muscle and a shift in playbook

This reporting season has topped expectations, and Bloomberg Intelligence data show third quarter profits for the MSCI Europe Index are set to climb more than 32%, the fastest pace since early 2022. That profit backdrop has coincided with investors dialing back AI-heavy bets and favoring steadier groups like health care and consumer staples.

Since October began, the region's benchmark has beaten the MSCI ACWI Index and is on track for its strongest quarter of relative performance versus global stocks since the first quarter of 2025.

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Central bank moves and stock standouts

In the UK, the FTSE 100 added ground after the Bank of England lifted interest rates and signaled another hike could be coming. Among notable contributors to the Stoxx 600's rise were Tecan Group AG, Endeavour Mining Plc and Auto1 Group SE.

Not everything climbed. Rheinmetall AG sank as much as 18% after trimming its 2026 sales goal for a second time, pointing to holdups in the Boxer armored vehicle program. AP Moller-Maersk A/S retreated after its upgraded outlook failed to match investor hopes. On the flipside, precious metals names including Endeavour Mining and Pan African Resources Plc were among the day's best performers as bullion extended Wednesday's gains.

Policy watch and the investor angle

Traders are now watching how the midterm outcome could shape the Iran war and tariff outlook, and whether possible US policy shifts might favor renewables while pressuring the AI theme. Wolf von Rotberg of Bank J Safra Sarasin said, "European equities are being boosted by hopes that a Democrat majority could reverse some of President Trump's most damaging policies, such as tariffs and his withdrawal of support for Ukraine."

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