Europe’s Stoxx 600 pulls back from record high as investors weigh earnings, oil prices

Europe's Stoxx 600 index briefly peaked at a record high of 666.58 points on Thursday, before easing off and closing 0.14 percent higher at 664.01 points. The index was buoyed by strong earnings and a shift away from AI-linked stocks in Asia and the US. Germany's Dax hit a record high, adding 0.4 percent to its close. European equities have been supported by robust earnings this quarter, despite ongoing inflation and concerns about further rate hikes.

Oil prices rose modestly on Thursday, though they remained below US$100 a barrel. Aneeka Gupta, equity strategist at WisdomTree, noted that resolving the US-Iran tension and reaching an agreement could help lower energy prices and improve European consumer sentiment, benefiting equity markets. European companies with less exposure to AI-linked stocks have outperformed their Asian and US counterparts, as investors become more skeptical about the sustainability of the AI trade due to stretched valuations, high debt, and potential tighter regulation following the US midterm elections.

European healthcare and consumer-related sectors, such as food & beverage, travel & leisure, and retail, have delivered double-digit gains this quarter. Energy and chemicals also outperformed on an annual basis, driven by higher commodity prices resulting from the Iran conflict. While 13 of the 20 sectors in the Stoxx 600 have outperformed the index since the US midterm elections, sectors like luxury and automotive have lagged, down more than 17 percent each in 2026.

The luxury sector is facing weak demand in China, while automakers like Volkswagen and Volvo have been hit hard by rising competition from Chinese electric-vehicle makers. There are also concerns about higher government debt in France and Italy ahead of key elections in 2027, which could strain investor confidence. In the US, Nvidia CEO Jensen Huang's resignation has cast a shadow over the outlook for the AI-focused company and the broader sector. European tech shares declined 0.5 percent on Thursday.