Europe close: FTSE 100 and DAX hit records as earnings impress

(Sharecast News) - European stock markets rose strongly on Thursday on the back of some well-received blue chip earnings, with record highs registered in London and Frankfurt.

The Stoxx 600 jumped 1.3% to a new high of 545.36, surpassing an earlier closing record of 539.53 reached last week, with all major indices across the continent rising by more than 1%.

Notably, the DAX gained 1.5% to 21,913.01, while the FTSE 100 rose 1.2% to a fresh peak of 8,727.28, with the latter helped by a drop in sterling after a rate cut by the Bank of England and a surge in the price of its biggest constituent AstraZeneca.

"The record high shows that for all the doom and gloom, talk of trade wars and tariffs, and broad geopolitical risk, investors keep putting money to work at companies with good valuations," said Neil Wilson, analyst at TipRanks.

MPC meeting, economic data in focus

The Bank of England trimmed interest rates by a quarter point on Thursday, as widely expected. The Monetary Policy Committee voted to cut the cost of borrowing to 4.5% by a majority of 7 to 2. The two external members who voted against - Swati Dhingra and Catherine Mann - argued instead for a bigger 50bps reduction, which took many by surprise.

However, the focus was firmly on the outlook statement, as cost pressures begin to build. "The near-term growth outlook was revised down, while the inflation outlook was revised up. When choosing between protecting growth and controlling inflation, the Bank of England clearly opted for the former," said Stefan Koopman, senior macro strategist at Rabobank.

In economic news, eurozone retail sales failed to grow for the third straight month in December as food, drinks, and tobacco volumes dropped sharply. According to Eurostat, the seasonally adjusted volume of retail trade was 0.2% lower over the month, under the consensus forecast for a 0.1% fall.

The HCOB eurozone construction PMI rose to 45.4 in January from 42.9 in December, indicating a sharp, but softer contraction in activity across the euro area construction sector. The latest downturn extended the current sequence of falling activity to 33 months but was the softest since February 2023, HCOB said.

The latest S&P Global UK construction PMI came in far below analyst expectations of 53.4, tumbling to 48.1 in January from 53.3 a month previously. It is the first time that the index has fallen below 50.0 since February 2024.

Meanwhile, German factory orders were up 6.9% in December, following a revised 5.2% slump in November. That was well ahead of the 2.0% increase expected by economists.

Blue chip earnings impress

Maersk surged as the Danish shipping giant beat fourth-quarter earnings forecasts, with investors shrugging off the news of weaker earnings in 2025 due to geopolitical worries.

Similarly, Danish brewing titan Carlsberg posted annual profit growth at the top end of guidance, with the stock rising strongly despite forecasts for a slight slowdown in earnings growth this year.

Societe Generale jumped after reporting a sharp increase in fourth-quarter profit, driven by a rebound in its domestic retail banking unit and a strong trading performance.

London's AstraZeneca also posted forecast-beating numbers, fuelled by strong demand for its cancer and cardiometabolic drugs.

Also higher was French drinks giant Pernod Ricard despite scaling back its full-year outlook, citing ongoing macro challenges and rising geopolitical uncertainties. Investors could have been bargain hunting, with the stock having slumped by more than a third over the past 12 months.