European stocks touch record high as earnings, tech gains lift sentiment
Market Overview and Sector Performance
By Tharuniyaa Lakshmi and Ragini Mathur
Aug 4 (Reuters) - European shares hit an all-time high on Tuesday, as gains in technology stocks and a slate of corporate earnings updates helped shift focus from lingering unease over the U.S.-Iran war and its impact on energy markets.
The pan-European STOXX 600 index was up 0.4% at 654.78 by 0856 GMT, after touching a record high of 656.85 earlier in the session.
Earnings Season and Company Updates
With the European earnings season gathering pace, investors sifted through company updates for clues on the region's business outlook.
Positive Earnings Reports
Shares in Bayer rose 3% after the German pharmaceuticals group reported an unexpected 1.9% increase in quarterly operating profit.
Technology Sector Gains
The technology sector gained 1.7%, with BE Semiconductor advancing 5.6% after Berenberg upgraded the stock to "buy", saying recent market weakness has created an attractive entry point for investors.
Chip Stocks Performance
Other chip stocks also advanced, with Soitec leading gains with a 5.1% rise. Aixtron, ASML and Infineon were up between 1.3% and 3.6%.
Global chip stocks have recently been volatile as investors assessed whether lofty valuations in the sector were justified by the durability of AI-driven demand and spending.
Analyst Insights and Regional Shifts
"So far, we believe company reports corroborate our view that firms are executing on their plans and that the region’s earnings trajectory is turning more positive," analysts at UBS Global Wealth Management said in a note.
"The market can also benefit from more locally-driven shifts such as Europe’s intensified focus on defence."
Sector Highlights
Aerospace and defence sector climbed 1.8%, while mining stocks jumped 2.6%, tracking stronger metals prices. [MET/L]
Underperformers and Market Risks
Negative Earnings and Forecasts
On the flip side, Lufthansa shed 10.6% after the German airline warned that operating profit could fall this year after the figure more than halved in the second quarter due to higher fuel costs tied to the U.S.-Iran war.
Zalando bottomed the STOXX 600, down 16.8% after the fashion retailer forecast 2026 revenue and growth to land in the lower half of its previously guided range and narrowed its adjusted operating profit outlook. Retail stocks fell 2.6%.
Energy Sector and Geopolitical Concerns
Energy stocks rose 1.1% as oil prices rebounded after a sharp sell-off on Monday. Concerns persisted that Middle Eastern supply could remain vulnerable, with a diplomatic breakthrough in the U.S.-Iran conflict still appearing elusive. [O/R]
Markets have repeatedly swung between optimism and pessimism since the conflict began in late February, as both sides have struggled to reach a mutually acceptable resolution.
(Reporting by Tharuniyaa Lakshmi and Ragini Mathur in Bengaluru; Editing by Mrigank Dhaniwala and Eileen Soreng)
