European stocks extended their gains for a fourth consecutive session on Wednesday, with benchmark indices approaching the record highs reached earlier in the month.
European stocks approach record highs
The rally was driven by optimism over larger deficit spending and cautious hopes for a lasting ceasefire between Russia and Ukraine. The Eurozone's STOXX 50 climbed 0.5% to close at 5,510, while the STOXX 600 gained 0.3% to finish at 556.
Investor sentiment was further lifted after the German Bundestag approved a long-anticipated amendment to the debt brake, allowing for increased fiscal spending on key sectors such as infrastructure and defense. Meanwhile, Russian President Vladimir Putin agreed to a limited ceasefire targeting Ukraine’s energy infrastructure, a move that markets interpreted as a possible step toward de-escalation, though broader geopolitical tensions remained high.
Best and worst performers
Among individual stocks, consumer discretionary shares led the gains, rebounding from recent pressure earlier in the month. Luxury and retail giants Hermès, Inditex, and Ferrari rose between 1.5% and 2.5%, reflecting renewed investor confidence in consumer demand. Industrials also performed strongly, with Schneider Electric and Safran surging over 2% each. However, after a historic rally, defense stocks saw a pause as investors took profits, leading to a slight pullback in shares of Rheinmetall, BAE Systems, and Thales.
Eyes on central banks
Looking ahead, traders remained focused on monetary policy developments and upcoming economic data, particularly the European Central Bank's stance on inflation and growth. The combination of fiscal expansion, geopolitical shifts, and sector rotations continued to shape the outlook for European equities in the near term.
