European shares surged to new record highs on Tuesday, driven by strong gains in retail and utilities sectors. After Monday’s market turbulence triggered by Chinese AI startup DeepSeek, investor confidence returned, lifting the STOXX 600 index and buoying optimism in key sectors.
Retail stocks were the standout performers, with giants like JD Sports, Kingfisher, and Howden Joinery climbing over 3% each. The utilities sector also saw significant gains, advancing nearly 2%, while media stocks added further momentum. Even technology stocks, which bore the brunt of Monday’s selloff, rebounded with a 0.6% rise, boosted by a stellar 10% jump in Alten shares following robust annual results.
DeepSeek’s disruptive entry into the artificial intelligence market had caused a sharp selloff in major tech firms just a day earlier, with Nvidia alone shedding $593 billion in market value—a record-breaking single-day loss. Analysts, however, remain measured. Danni Hewson of AJ Bell highlighted that the recent tech selloff reflected overstretched valuations rather than any structural weakness in the sector, describing it as a “reset” rather than a catastrophe.
Meanwhile, Sartorius shares soared 12.5% after the German pharmaceutical equipment supplier reported exceptional fourth-quarter results and a surge in bioprocess orders. Siemens Energy, another standout performer, rose 3% after reporting revenue above expectations, offering further reassurance to investors.
Beyond corporate earnings, broader economic indicators bolstered sentiment. French consumer confidence rose sharply in January, and Spain’s unemployment rate hit a 16-year low, reflecting resilience in the European economy. Investors are now turning their focus to key decisions from the Federal Reserve and the European Central Bank, with a quarter-point rate cut from the ECB already anticipated. Policymakers’ commentary will likely shape expectations for the easing cycle ahead.
Looking ahead, European bank earnings and geopolitical developments, including regulatory changes in the U.S., could influence market dynamics in the coming days. While some companies, such as Netcompany Group, saw sharp declines due to disappointing earnings, the overall mood remains buoyant, with opportunities emerging across sectors.
Europe continues to demonstrate resilience and adaptability in the face of global challenges. From retail and utilities to technology and pharmaceuticals, the region’s diverse economy offers robust investment potential, paving the way for further growth.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
