European STOXX 600 hits all-time high on tech and earnings

European shares climbed to fresh all-time highs on Tuesday as gains in technology stocks and a busy slate of corporate earnings lifted sentiment, even as investors continued to monitor the ongoing U.S.-Iran conflict and its impact on energy markets.

The pan-European STOXX 600 index touched a record high of 656.85 during the session, while the Euro Stoxx 50 rose 0.7%.wtvbam+2

Tech and Earnings Drive Gains

Technology shares led the advance, with the sector gaining 1.7%. BE Semiconductor rose after Berenberg upgraded the stock to "buy," citing an attractive entry point following recent market weakness. Other chip stocks including Soitec, Aixtron, ASML ↗ 0.83%, and Infineon also advanced. AI-related stocks received an additional boost from strong results at U.S. software firm Palantir ↗ 2.10%, which topped expectations and raised its revenue outlook.tradingview+1

Among individual movers, Bayer rose after the German pharmaceuticals group reported an unexpected 1.9% increase in quarterly operating profit. In the UK, BP ↘ 2.12% gained after reporting stronger-than-expected profits, while HSBC ↗ 1.35% edged higher after beating earnings estimates and raising its net interest income target.wtvbam+2

"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.wtvbam

Lufthansa and Zalando Weigh on Sentiment

Not all earnings news was positive. Lufthansa Deutsche Lufthansa AG fell sharply after the German airline warned that operating profit could fall this year, with the figure more than halving in the second quarter due to higher fuel costs tied to the U.S.-Iran war. Zalando was the worst performer on the STOXX 600, dropping after the fashion retailer forecast 2026 revenue and growth to land in the lower half of its previously guided range.reuters+1

Middle East Tensions Linger

Energy stocks edged higher 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, though the European benchmark has gained over 5% since the start of the war, recovering from lows hit in March.reuters

The aerospace and defence sector climbed 1.8%, while mining stocks jumped 2.6% on stronger metals prices.wtvbam