European shares close at a record high, but the rally reveals sharp sectoral divergence as energy stocks surge to multi-year peaks while technology counters tumble after weak earnings and cautious outlooks
European equities ended at a fresh record on Wednesday, but the milestone masked a sharply divided market as investors navigated a dense earnings calendar and digested resilient US economic data.
The pan-European Stoxx 600 edged up 0.1 per cent to close at 621.58 after touching an intra-day all-time high. London’s FTSE 100 led gains, rising 1.14 per cent to 10,472.11, buoyed by mining and energy heavyweights. Italy’s FTSE MIB slipped 0.62 per cent to 46,510.83, while France’s CAC 40 and Germany’s DAX finished largely flat, reflecting a market driven by stock- and sector-specific moves rather than broad momentum.
Energy powers the rally
Energy stocks emerged as the clear winners, surging 3.8 per cent to their highest level since 2008. A more than 2 per cent rise in crude prices added fuel to the rally, reinforcing a rotation into commodity-linked counters.
Tech stumbles on earnings shock
In sharp contrast, technology and media shares fell 1.8 per cent and 2.6 per cent, respectively, exposing the widening fault lines within European equities.
France’s Dassault Systemes was at the centre of the sell-off. The software maker’s shares plunged more than 20 per cent—their steepest one-day decline on record—after reporting annual revenue of 6.24 billion euros, broadly flat and below expectations. Software revenue growth remained subdued at 5.64 billion euros, and the company’s outlook failed to reassure investors.
Corporate earnings drive stock-specific moves
Elsewhere, earnings dictated direction.
Dutch brewer Heineken gained around 4 per cent after posting a 4.4 per cent rise in annual operating profit, despite a 1.2 per cent drop in volumes amid challenging conditions. The company outlined plans to cut between 5,000 and 6,000 jobs over the next two years as part of a broader turnaround effort and projected operating profit growth of 2 to 6 per cent this year.
In Germany, Siemens Energy climbed 8.4 per cent after reporting a near threefold increase in quarterly net profit to 746 million euros, supported by robust demand linked to data centre expansion. Orders reached a record high, signalling sustained investment in digital infrastructure.
Commerzbank, however, slipped 2 per cent despite delivering a record annual operating profit of 4.5 billion euros and net profit of 2.6 billion euros, exceeding its target. The muted reaction reflected cautious investor sentiment even as management flagged higher profit expectations for 2026.
Shares of Lufthansa fell 4 per cent ahead of a planned 24-hour pilot strike over a pensions dispute, adding to the day’s mixed corporate picture.
US data reinforces resilience narrative
Beyond Europe, markets digested stronger-than-expected US nonfarm payroll data. The US economy added 130,000 jobs in January, above forecasts, with unemployment at 4.3 per cent.
The figures reinforced the narrative of US economic resilience, though they also complicated expectations around the timing of potential interest rate cuts.
In currency markets, the British pound was little changed against the US dollar and edged lower against the euro. UK government bond yields, which had spiked earlier in the week amid political uncertainty, retreated across the curve.
Asian markets had closed modestly higher overnight despite softer Chinese inflation data, setting a cautiously positive tone for European trading.
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