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(Bloomberg) — European stocks rose for a fourth week in a row as a stronger-than-expected earnings season and growing M&A chatter lifted regional benchmarks to fresh records.
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The Stoxx Europe 600 Index was up 0.3% at the close, advancing 1.7% for the week. Technology and healthcare stocks outperformed, while the energy sector was the biggest laggard.
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Goodwin Plc climbed 9.8% as it considered selling a substantial part of its mechanical engineering division. Genel Energy Plc jumped 26% after rejecting an approach from Norwegian oil and gas producer DNO ASA. On the other hand, Eutelsat Communications SACA slid 4.6% after the satellite operator’s guidance missed estimates.
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Investors are returning to European equities as a bumper earnings season reinforces confidence about economic growth. MSCI Europe companies have posted a 17% surge in second-quarter profits, the highest since late 2022, according to figures compiled by Bloomberg Intelligence.
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European equity funds attracted $55 million of inflows in the week through Wednesday, the first in three weeks, according to a note from Bank of America Corp. citing EPFR Global data.
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The rally has also broadened out beyond a handful of heavyweight stocks. Roughly three quarters of Stoxx 600 members are now trading above their 200-day moving average, near the top of the range seen over the past decade, in what’s considered a key bullish signal.
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Still, lingering geopolitical concerns and thin summer liquidity pose risks to further gains in the coming weeks. US President Donald Trump said negotiations between Iran and Oman over the Strait of Hormuz are “moving along,” even after some Iranian lawmakers said they would seek to bar American and Israeli ships from the waterway as part of the deal.
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“Europe has regained record territory, but the easy part of the rally may be behind us,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “Geopolitical or energy-related surprises could produce sharper, more volatile moves. Our base case is consolidation rather than a major reversal.”
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For more on equity markets:
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- Germany’s Massive Underperformance Looks Misplaced: Taking Stock
- M&A Watch Europe: Apollo, EasyJet, Goodwin, Nscale, Pharos
- Europe’s Venture Capital-Backed IPO Pipeline Shrinks: ECM Watch
- US Stock Futures Unchanged; Health Catalyst, Trade Desk Fall
- Wizz Swings to Loss: The London Rush
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—With assistance from Levin Stamm.
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