European Markets Defy Holiday Lull with Resilient Gains

Amid low year-end trading volumes, the pan-European STOXX 600 index inched closer to 600 points, driven by banking and commodity stocks. As 2025 concludes, this marks its best performance since 2021, aided by lower interest rates and fiscal policies in Germany. Defence stocks remain strong amid increased European spending.

The European share gauge is continuing its remarkable ascent, transcending the usual year-end lull that markets typically experience. Leading the way were bank and commodity stocks, driving the pan-European STOXX 600 up by 0.02%, pushing ever closer to the significant 600-point threshold as of 0943 GMT on Tuesday.

Research director Kathleen Brooks commented on the sector's buoyant performance, attributing it to robust investor sentiment and predicted sustained growth into 2026, particularly for defence and banking stocks. Despite a subdued Santa rally, 2025's unexpectedly strong gains have kept spirits high among investors.

The defence index maintained its record-setting pace, poised to mark its biggest annual gain since 1996 thanks to heightened European defence allocations. Basic resources also saw substantial growth with a 1.4% rise, benefiting from stabilizing silver and gold prices. Energy and technology stocks showed modest improvements, while healthcare and food sectors lagged.

(With inputs from agencies.)