European stocks powered ahead for a third day, reaching a fresh record, as strong earnings reports gave traders the confidence to keep rotating out of US companies and into ones from Germany, France and the UK.
The Stoxx Europe 600 Index gained 1.2% by the close. Cyclical sectors led gains, with miners, technology and energy shares the biggest outperformers.
The index has climbed 6.2% this year, with investors taking the view that Europe offers steady economic growth and cheaper valuations at a time when there's more anxiety about US technology stocks.
Gains were more subdued in the US, where the S&P 500 rose 0.8% by the European close and is up less than 1% for the year.
Nicolas Domont, a fund manager at Optigestion in Paris, said he recently cut his US holdings to 50% from 70% and added more European shares. The latest Bank of America survey showed plenty of investors are making similar bets, with a net 35% saying they are overweight European equities relative to global markets, up from 9% just three months earlier.
"Like the rest of the market, we're continuing to rotate," said Domont. "The AI scare trade is creative destruction in the making and when one doesn't know how it will unfold, one diversifies."
Among individual movers, BAE Systems Plc gained 4.0% after saying it expects solid earnings growth, an indication that the rapid expansion of defense budgets shows little sign of abating.
The standout mover of the session was Raspberry Pi Holdings Plc, which at one stage surged as much as 33% before erasing gains. The stock has rebounded from a record low two weeks ago after a social media post highlighted that AI agents like OpenClaw could drive demand for Raspberry Pi's single-board computers.
The AI disruption is continuing to cause some big market swings, said Francois Dossou, head of equities at Sienna Gestion in Paris.
"Yes the Stoxx 600 is at a record high, but there are very violent individual movements below the surface which blur the overall picture," he said. "On the bright side, this earnings season has produced a real growth in profits."
JPMorgan Chase & Co. strategists have echoed that bullishness. They expect earnings to accelerate in 2026 after a period of underperformance.
- Bayer AG shares dropped 7.1%, the most since August, amid uncertainty around attempts to settle lawsuits tied to Roundup weedkiller.
- EssilorLuxottica SA fell 2.9%. Bloomberg reported that Apple is accelerating development on new wearable devices, including smart glasses.