European stocks close at record high after economic data

EUROPEAN shares scored another record close on Tuesday, after benchmarks in Germany and Spain climbed to all-time highs, as positive local economic data distracted investors from heightened international tensions.

The pan-European Stoxx 600 ended last year with its strongest advance since 2021, fuelled by easing interest rates and increased defence spending. While analysts expect this year’s returns to be more measured, they also expect the market to keep growing.

On Tuesday, Goldman Sachs lifted its 12-month target for the Stoxx 600. The index closed up 0.58 per cent at 605.28 points, a day after piercing the 600-point level for the first time.

“We’re becoming a bit inured to the environment of heightened uncertainty,” said Matthew Sherwood, senior global economist at the Economist Intelligence Unit.

“There’s still guarded optimism. And there are things afoot that are supportive of growth.”

Inflation data

Among regional bourses, Germany’s DAX index and Spain’s IBEX edged up after hitting record highs in early trading, while the benchmark index in Italy slipped 0.2 per cent, paring gains after a new peak.

Inflation cooled more than economists expected across several of the euro zone’s biggest economies last month, even as growth held steady, reinforcing the view that price pressures have faded and the bloc is surprisingly resilient.

In Germany, the region’s largest economy, inflation eased to 2.0 per cent from 2.6 per cent, undershooting forecasts of 2.2 per cent. In France, inflation dipped to 0.7 per cent from 0.8 per cent, while Spain’s rate edged down to 3.0 per cent from 3.2 per cent.

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Policymakers have signalled that there was no appetite to lower interest rates any further.

“We’ll see perhaps a more dovish view from the ECB that gives it a bit more room to even not necessarily cut, but certainly talk about being more accommodative in the short term,” said IG chief markets strategist, Chris Beauchamp.

Healthcare stocks among winners

The healthcare index rose 3 per cent, hitting its highest since March last year. Danish obesity drugmaker Novo Nordisk led with gains of 5 per cent.

The company launched its Wegovy pill in the US on Monday, intensifying competition with rival Eli Lilly.

AstraZeneca and Novartis rose 4.9 per cent and 2.8 per cent respectively.

Basic resources also added 2 per cent and was hovering near levels not seen since 2022. Among individual stocks, InPost jumped nearly 30 per cent after the parcel locker company said it had received an indicative proposal regarding the potential acquisition of all its shares.

Adidas slumped 3.6 per cent after Bank of America double-downgraded the sportswear retailer to “underperform” from “buy”, citing expectations of slower sales growth. REUTERS