Bull Market 2026: European Indices hit historic highs amid tech and defense surge

Indices

Major European indices have reached or are approaching all-time highs, reflecting a robust bullish momentum across the region. The FTSE 100 (UK) has recently surpassed the 10,000-point threshold and is currently trading at 10.22K, posting a 0.51% increase, which signals sustained investor confidence and positive momentum in UK equities. The German DAX 40 has climbed to 24.52K, up 0.85%, nearing its historical peak despite underlying concerns about Germany’s economic slowdown. France’s CAC 40 has returned to levels last seen in November 2025, trading at 8.13K for a 0.68% gain. The Euro Stoxx 50, representing the broader Eurozone, has set new records at 5.95K, registering a 0.98% increase.

Buy signals are particularly strong in the technology and financial sectors, with momentum supported by solid corporate earnings and easing trade tensions. The leadership in these sectors suggests that the current rally may have further room to run, although traders should remain mindful of potential volatility from upcoming macroeconomic releases.

Stocks

Sector leadership is evident in Information Technology (up 2.06%), Telecommunications (up 1.13%), and Financials (up 1.08%), each outperforming the broader market. Notable individual performers include STMicroelectronics and Airbus, both of which have posted significant gains that are reinforcing the bullish sector sentiment. Positive earnings reports from Dassault Systèmes and BNP Paribas have further contributed to the upward trend of the CAC 40, signaling robust underlying fundamentals.

In the defense sector, stocks such as Rheinmetall AG, BAE Systems PLC, and Thales SA have experienced notable appreciation, driven by increased defense spending across Europe. The Select STOXX Europe Aerospace and Defense ETF has surged by 27.5% in the past month, reflecting elevated investor confidence in the sector’s growth prospects.

Economic News

Recent economic data points to a favorable backdrop for equities, as strong corporate earnings have boosted investor confidence and underpinned the current rally. However, macroeconomic events continue to influence sentiment. Germany’s prolonged recession since 2023, resulting from energy dependency and slow digital adoption, remains a background risk but has yet to derail overall market momentum.

Geopolitical developments, such as increased defense spending in response to shifting U.S. policies, have provided tailwinds to specific sectors. Meanwhile, the European Central Bank’s cautious monetary policy stance, in the face of global uncertainties, is supporting risk assets while keeping a close watch on potential credit risks.

Economic Events

Market participants are closely monitoring the release of Eurozone unemployment figures and U.S. JOLTS job openings data. These indicators are expected to provide further direction for equities and could inject additional volatility, especially if they diverge from consensus expectations. Investors are advised to remain vigilant, as these events may trigger short-term retracements or opportunities in both indices and individual sectors.

Earnings Events

The ongoing earnings season has been characterized by strong results from leading European corporates. Companies such as Dassault Systèmes and BNP Paribas have reported positive earnings, reinforcing the uptrend in their respective indices. Continued robust earnings delivery is likely to extend the current rally, particularly if forthcoming reports meet or exceed market expectations.

This Week's IPOs

There are no significant IPOs scheduled for this week expected to impact the main European indices. The absence of major new listings suggests that market liquidity and attention will remain concentrated on established index constituents and ongoing earnings releases.

Market Sentiment

Overall market sentiment remains firmly bullish, underpinned by strong corporate results, sector-specific rallies, and easing global trade tensions. The prevailing optimism is further supported by technical breakouts to new highs across major indices. However, there is a degree of caution as traders await key economic data and remain alert to potential headline risks from geopolitical events or unexpected policy shifts.

Recommendations

Given the current bullish momentum, traders are advised to maintain or initiate long positions in outperforming sectors such as technology, financials, and defense. Setting trailing stop-losses is recommended to lock in gains while protecting against sudden reversals, especially in light of upcoming economic data releases. Take-profit targets should be periodically reviewed, as further upside may be supported by continued earnings strength and positive macroeconomic developments. Traders should remain nimble, ready to adjust positions in response to any signs of volatility stemming from geopolitical or economic surprises.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.