European stock markets started 2026 with record highs. Who led the growth?

On the first trading day of 2026, January 2, stock markets in the European Union and the United Kingdom continued last year's rally and reached new historic highs, despite low trading volumes after the New Year holidays. European indices are being driven upward by growth in government defense spending and the flow of investor capital away from the overvalued US tech sector.

The STOXX 600 index rose 0.7% in the first hour of trading in Europe on January 2. Shares in mining and energy companies outperformed the market, while developers and food producers lagged behind the overall trend, according to Bloomberg. On January 2, the pan-European benchmark may close in positive territory for the third week in a row.

British blue chip index The FTSE 100 rose above 10,000 points for the first time, continuing the positive momentum of last year, when it grew by more than 20% and outperformed the US benchmark S&P 500 (which gained just over 16% in 2025). The FTSE 100 was supported by a rally in banking, mining, and defense stocks, all of which are widely represented on the London market, which international investors consider relatively cheap, partly due to the absence of technology giants, writes the British Financial Times (FT).

According to Trading Economics, the leaders of growth in the STOXX 600 index at the opening of trading on Friday, January 2, were French payment services provider WorldLine, Danish energy company Orsted, and German steel giant Thyssenkrupp. The rise in quotations in London was led by one of the largest silver producers Fresnillo, aerospace component developer Melrose, and one of the dealers in the aircraft engine market Rolls-Royce.

"While in the US the big unknown (key factor of uncertainty — Oninvest) is the fate of shares in companies linked to artificial intelligence, in Europe government spending on infrastructure in Germany and defense across Europe should stimulate both economic growth and stock markets," Bloomberg quotes Panmure Liberum investment strategist Joachim Clement.

"The FTSE 100 sector structure is dominated by global growth leaders such as the mining sector and banks," added Pictet Asset Management analyst Arun Sai.

The STOXX 600 ended last year with its best performance since 2021 thanks to lower interest rates, fiscal stimulus in Germany, and capital rotation away from overvalued US technology stocks, Reuters reports. The British market also benefited from investor concerns about the inflated valuations and expenses of US technology companies in recent months: UK stocks offer cautious investors an inexpensive way to diversify their investments outside the US, notes the FT.

This article was AI-translated and verified by a human editor