European stocks touch record high as earnings, tech gains lift sentiment

European shares reached an all-time high on Tuesday, driven by gains in technology stocks and positive corporate earnings updates, despite lingering concerns over the US-Iran conflict.

European shares hit an all-time high on Tuesday, as gains in technology stocks and a slate of corporate earnings updates helped shift focus from lingering unease ‌over the U.S.-Iran war and its impact on energy markets. The pan-European STOXX 600 index was up 0.4% at 654.78 by 0856 GMT, after touching a record high of 656.85 earlier in the session. With the European earnings season gathering pace, investors sifted through company updates for clues ‌on the region's business outlook. Shares in Bayer rose 3% after the German pharmaceuticals group reported an unexpected 1.9% increase in quarterly operating ‌profit. The technology sector gained 1.7%, with BE Semiconductor advancing 5.6% after Berenberg upgraded the stock to "buy", saying recent market weakness has created an attractive entry point for investors. Other chip stocks also advanced, with Soitec leading gains with a 5.1% rise. Aixtron, ASML and Infineon were up between 1.3% and 3.6%. Global chip stocks have recently ⁠been volatile ​as investors assessed whether lofty valuations ⁠in the sector were justified by the durability of AI-driven demand and spending. "So far, we believe company reports corroborate our view that firms are executing on their ⁠plans and that the region’s earnings trajectory is turning more positive," analysts at UBS Global Wealth Management said in a note. "The market can also ​benefit from more locally-driven shifts such as Europe’s intensified focus on defence." Aerospace and defence sector climbed 1.8%, while mining stocks ⁠jumped 2.6%, tracking stronger metals prices.

On the flip side, Lufthansa shed 10.6% after the German airlinewarned that operating profit could fall this year after the figure more than ⁠halved ​in the second quarter due to higher fuel costs tied to the U.S.-Iran war. Zalando bottomed the STOXX 600, down 16.8% after the fashion retailer forecast 2026 revenue and growth to land in the lower half of its previously guided range and narrowed ⁠its adjusted operating profit outlook. Retail stocks fell 2.6%.

Energy stocks rose 1.1% as oil prices rebounded after a sharp sell-off on Monday. Concerns ⁠persisted that Middle Eastern supply could ⁠remain vulnerable, with a diplomatic breakthrough in the U.S.-Iran conflict still appearing elusive. Markets have repeatedly swung between optimism and pessimism since the conflict began in late February, as both sides have struggled to ‌reach a mutually acceptable ‌resolution.