Surge in European Shares see their best performance since 2021

European equity markets concluded 2025 with minimal movement on the final trading session, maintaining positions near record highs and preparing to close what proved to be their strongest annual performance since 2021. The gains were underpinned by lower interest rates, substantial German fiscal support, and a notable rotation of capital away from highly valued United States technology stocks.

The pan-European STOXX 600 index edged 0.1 per cent lower to 592.03 by 08:22 GMT, yet remained firmly on course to deliver annual gains of approximately 16 per cent. This represents the benchmark’s most robust yearly performance in four years, marking a significant recovery for European equities.

Trading activity across the continent remained notably subdued ahead of the New Year holiday. Markets in Germany, Italy, and Switzerland had already closed for the day, whilst exchanges in France, Spain, and the United Kingdom operated on abbreviated schedules.

Performance across major regional bourses varied considerably throughout the year. Spain’s IBEX emerged as the standout performer, positioned to gain nearly 50 per cent and significantly outpacing all counterparts in the region. This exceptional performance underscored the strength of Spanish equities despite broader European economic challenges.

Conversely, France’s CAC 40 was set to record the most modest gains among major European bourses, rising just 10.2 per cent. Political instability, mounting concerns over fiscal debt levels, and a pronounced surge in bond yields all contributed to constrained French market performance throughout 2025.

Germany’s DAX index was positioned for a 23 per cent advance, benefiting substantially from the government’s comprehensive economic support measures. These included fiscal stimulus packages and strategic infrastructure investments that bolstered investor confidence in German equities.

The UK’s FTSE 100 maintained its winning trajectory, on track to climb 22 per cent during 2025. This performance marked the index’s fifth consecutive year of positive returns, demonstrating sustained resilience in British equity markets despite ongoing economic uncertainties.