STOXX 600 pulls back from record high as investors weigh earnings

FRANKFURT: Europe’s benchmark STOXX 600 eased off a record high but still eked out a slim gain on Thursday, boosted by strong earnings and a rotation out of AI-linked stocks in Asia and the US.

The pan-European index closed 0.14 percent higher at 664.01 points after touching an all-time peak of 666.58 points earlier, as oil prices edged higher. Germany’s DAX added 0.4 percent, hitting a record high.

European equities have been supported by robust earnings this quarter, despite lingering inflation and further rate hike worries. Prices of oil, a key import for Europe, turned higher on Thursday, but remained below USD100 a barrel.

“If we are able to get a truce and an agreement between the US and Iran, that will help lower energy prices, which in turn should help allow for an improvement of sentiment among the European consumer… that should help drive a broadening out of the European equity market,” said Aneeka Gupta, equity strategist at WisdomTree.

Siemens rose 1.7 percent after the industrial technology group raised its mid-term growth outlook.

Adecco Group jumped 14.7 percent after reporting stronger-than-expected third-quarter operating income and pointing to improving hiring conditions for permanent roles.

Europe’s smaller exposure to AI-linked stocks has also supported its outperformance versus Asian and US peers as investors increasingly question the sustainability of the AI trade amid stretched valuations, debt-funded spending and the prospect of tighter regulation following the Democrats’ US midterm electoral sweep.

Investors have instead taken a liking to defensives, with European healthcare and consumer-related sectors such as food & beverage, travel & leisure and retail posting double-digit gains this quarter.

Energy and chemicals have continued to outperform on an annual basis, benefiting from higher commodity prices due to the Iran conflict.