European shares start 2026 at record highs; tech, defence provide lift

[BENGALURU] European stocks kicked off 2026 by scaling record highs on Friday (Jan 2), extending 2025’s standout rally as tech and defence shares powered the gains.

The pan-European Stoxx 600 rose 0.7 per cent to 596.14, just four points away from the closely watched 600-mark, as traders returned from New Year celebrations. The index also notched its third straight weekly advance.

The benchmark wrapped up 2025 with its strongest performance since 2021, buoyed by falling interest rates, German fiscal stimulus and a rotation away from high-flying US tech stocks with stretched valuations.

It was a year that tested investors, too. Markets absorbed tariff shocks and rebounded from April’s lows after US President Donald Trump announced blanket tariffs on trading partners, rattling global risk appetite.

On Friday, London’s blue chip FTSE 100 index hit the symbolic 10,000-point marker for the first time.

“From a logical point of view, a milestone of 10,000 is not important, but psychologically it is, as what we are seeing is that investors are keen to put money into the market without the fear of record highs,” said Nick Saunders, chief executive officer of trading platform Webull UK.

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Britain’s FTSE 100 hits 10,000 mark in strong start to 2026

Bourses across the region ended the week higher. The German index ticked up 0.2 per cent, France’s CAC 40 added 0.6 per cent, while the FTSE 100 rose 0.2 per cent.

Within the Stoxx 600, ASML jumped 7 per cent, driving gains in peers and the technology sub-sector. Defence stocks gained the most, advancing 3.3 per cent. REUTERS