UPDATE 2-European stocks' early-2026 rally hits speed bump as retail reality check drags

European stocks fell on Thursday, dragged down ‌by a selloff in tech and disappointing updates from several heavyweight retailers, while weaker gold and copper prices weighed on broader market mood.

European stocks fell on Thursday, dragged down ‌by a selloff in tech and disappointing updates from several heavyweight retailers, while weaker gold and copper prices weighed on broader market mood. The retreat cools the early-2026 rally in the ⁠pan-European STOXX 600, which notched a run of record highs out of the gate this year, underscoring that earnings season may be the next big test of investors' appetite for risk.

The index fell 0.2% to 603.83, logging its second consecutive day in the red. ​Technology stocks were the biggest drag on the index, falling 2.2%. Retail stocks slipped 0.6%, snapping a four-day winning streak, while ‍miners fell 1.6% as gold and copper prices eased.

The STOXX aerospace and defence index, however, touched an all-time high after U.S. President Donald Trump called for higher defence spending. Elsewhere, Puma jumped 8.5% after a report said China's Anta Sports Products has offered to buy 29% of the sportswear firm from France's Pinault ⁠family.

DISAPPOINTING ‌EARNINGS SOUR SENTIMENT UK retail stocks ⁠slid as fresh trading updates exposed a still-fragile consumer backdrop: shoppers are buying essentials, but thought twice about spending a lot on clothing and gifts over Christmas.

Shares ‍of Associated British Foods fell 14% to their lowest since April after the Primark owner flagged weaker annual profits. The downbeat mood spread to ​Greggs, which said consumer confidence remains subdued, sending its shares 6.5% lower. Tesco slid 6.7% after reporting third-quarter sales.

In contrast, Marks & ⁠Spencer bucked the trend, rising 5% after reporting robust Christmas demand for its premium food range, even as fashion and homeware sales softened. The moves come as ⁠investors gear up for the first earnings season of 2026, hunting for clues on whether retailers can navigate a tricky mix of inflation fatigue and shifting spending habits. While Venezuela headlines continue to drip into markets, traders appear largely desensitized, though ⁠the steady stream of news has added a layer of unease, leaving some split between buying the dip and trimming risk.

"Investors are ⁠navigating a familiar mix ‌of macro and geopolitical risks. Ongoing geopolitical tensions, fiscal uncertainty and policy noise have encouraged more defensive positioning, while the absence of a clear near-term catalyst has reduced conviction to chase markets higher," ⁠said Daniela Hathorn, senior market analyst at Capital.com.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)