Stoxx hits three-week high as risk sentiment improves, volatility drop
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European equities rallied on Wednesday, with the Stoxx 600 index climbing 1.6% to its highest level since April 3, buoyed by a more conciliatory tone from the U.S. administration toward both China and Federal Reserve Chair Jerome Powell. The upbeat sentiment extended across global markets, with S&P 500 futures up 2.2%, further fueling risk-on momentum.
Sector performance was broad-based, led by technology and mining stocks, both up 3.3%, while luxury names also posted strong gains, rising 2.3%. The standout performer was SAP, which surged 9.43% after delivering quarterly results that beat analyst expectations. As Europe’s largest company by market capitalization, the software giant’s sharp rise added significant weight to the broader index rally.
Adding to the bullish tone, the Euro Stoxx volatility index (V2TX) dropped to 23.6, its lowest reading since early April, signaling a marked reduction in near-term investor anxiety. This aligns with easing geopolitical rhetoric and a return of confidence in monetary policy stability following recent political volatility in the U.S.
In contrast, defense stocks underperformed, with Germany’s Rheinmetall (RHM) down 2.84%, Leonardo (LDO) off 1.99%, and Sweden’s Saab also in the red. The sector's decline may reflect a temporary rotation out of recent outperformers as traders reallocate toward growth-sensitive sectors amid a broader market rebound.
Sector performance was broad-based, led by technology and mining stocks, both up 3.3%, while luxury names also posted strong gains, rising 2.3%. The standout performer was SAP, which surged 9.43% after delivering quarterly results that beat analyst expectations. As Europe’s largest company by market capitalization, the software giant’s sharp rise added significant weight to the broader index rally.
Adding to the bullish tone, the Euro Stoxx volatility index (V2TX) dropped to 23.6, its lowest reading since early April, signaling a marked reduction in near-term investor anxiety. This aligns with easing geopolitical rhetoric and a return of confidence in monetary policy stability following recent political volatility in the U.S.
In contrast, defense stocks underperformed, with Germany’s Rheinmetall (RHM) down 2.84%, Leonardo (LDO) off 1.99%, and Sweden’s Saab also in the red. The sector's decline may reflect a temporary rotation out of recent outperformers as traders reallocate toward growth-sensitive sectors amid a broader market rebound.