European Stocks Soar as AI Boom and Fed Changes Shape 2026

European stocks began 2026 with record highs, driven by AI optimism and changes at the U.S. Federal Reserve. Despite anticipated market volatility, the ongoing AI boom continues to support markets. Investors focus on the U.S. economy, with key economic data and Federal Reserve policies potentially impacting market trends.

European stocks kicked off 2026 at fresh milestones, with the FTSE 100 reaching 10,000 points for the first time, amid optimism around AI innovation and impending changes at the U.S. Federal Reserve. The pan-European STOXX 600 index marked its third consecutive weekly advance, indicating investor confidence despite potential market volatility.

Asia joined the rally, with Hong Kong stocks climbing to a 1 1/2-month high, while markets in Taiwan, South Korea, and Singapore set new record highs. Amid speculation over Federal Reserve policy shifts, S&P 500 futures rose 0.5%, and Nasdaq futures added 1%, showing continued investor enthusiasm.

The AI boom persists as a market driver, while investor attention remains on the economic performance of the U.S. and the trajectory of Fed policies. Traders anticipate potential rate cuts, influenced by delayed economic data following the U.S. government shutdown, as the global economy navigates complex geopolitical and market dynamics.

(With inputs from agencies.)