Europe close: Stocks extend rally as Iran-US tensions ease

15th Jan 2026 16:16

(Sharecast News) - European equities extended their rally on Thursday, with the pan-European Stoxx 600 touching a fresh record as easing geopolitical tension, falling oil prices and upbeat economic data underpinned sentiment, while chipmakers surged after strong results from Taiwan Semiconductor Manufacturing Company.

The pan-European Stoxx 600 rose 0.49% to 614.57.

Germany's DAX added 0.26% to 25,352.39, France's CAC 40 slipped 0.21% to 8,313.12, and the UK's FTSE 100 climbed 0.54% to 10,238.94.

Patrick Munnelly at TickMill said European markets were "driven by falling crude oil and precious metal prices," adding that investors were rotating away from "high-performing US tech and defence stocks to other sectors," which helped sustain momentum across the region.

Energy stocks lagged after crude prices slumped, easing supply fears.

Brent crude was last down 4.03% to $63.84 a barrel and West Texas Intermediate dropped 4.27% to $59.37 after Donald Trump toned down earlier threats of "very strong action" against Iran, saying he had been told the killings of anti-regime protestors were subsiding and that he believed there was currently no plan for large-scale executions.

Russ Mould at AJ Bell noted that "Brent crude fell by ... a substantially larger movement than one might expect on the commodities market for an average day," adding that markets interpreted Trump's remarks as reducing "the chance the US takes military action against Iran, and therefore a lower risk of disruption to oil supplies."

He said the pullback had a "direct impact on shares in oil producers," with BP and Shell among those under pressure.

Separately, talks in Washington between officials from Greenland, Denmark and the US ended with what a Danish official described as "fundamental disagreement" over the territory's ownership.

Eurozone industrial output rises as German economy returns to growth

Economic data in Europe was supportive.

Eurostat reported that eurozone industrial production rose 0.7% in November, matching October's increase and beating expectations for a 0.5% rise, marking the strongest monthly gain since May 2025.

Growth was led by capital goods output, up 2.8%, and intermediate goods, up 0.3%, offsetting declines in energy and consumer goods.

The eurozone's trade surplus narrowed sharply to €9.9bn from €17.9bn in October, below the €15.2bn consensus, as imports rose faster than exports.

The region's surplus with the UK stood at €15.4bn, down from €16.5bn a year earlier, while the surplus with the US fell to €10.7bn as exports dropped 20.3% year on year.

Munnelly said the data fitted a broader global pattern in which "investors are closely watching how this shift in investment plays out," particularly as markets reassess growth and trade dynamics.

Germany meanwhile returned to growth in 2025 for the first time in two years, with provisional data from Destatis showing GDP up 0.2% year on year, or 0.3% after calendar adjustments.

"After two years of recession, the German economy edged back into growth," said Destatis president Ruth Brand, while warning that exports continued to face "strong headwinds."

Carsten Brzeski, global head of macro at ING, said the data suggested "this period of national gloom has come to an end," pointing to a clear turning point in industry and rising orders, while Holger Schmieding at Berenberg said higher government spending could add around 0.4 percentage points to growth in 2026 and help lift Germany to a cyclical peak of 1.3% growth in 2027.

In the UK, GDP grew 0.3% in November after a 0.1% contraction in October, beating expectations for 0.1% growth, according to the Office for National Statistics.

Services output rose 0.3% and production jumped 1.1%, though construction fell 1.3%.

Motor vehicle production surged 25.5% as the industry recovered from a cyberattack earlier in the autumn.

ONS director Liz McKeown said the economy "grew slightly in the latest three months."

Mould said the better-than-expected figure was "welcome news for the new year," noting that while it was "partially helped by Jaguar Land Rover getting back to work after a cyber-attack, the increase in services activity shows there is more to the GDP progression than just restarting car production."

However, he added that "UK economic activity is still pedestrian overall," citing continued reluctance among businesses to invest and "a fragile jobs market."

Munnelly cautioned that the underlying picture remained uneven, pointing out that November's strength reflected "concentrated contributions within the services sector," meaning momentum across the economy was not broad-based.

UK housing data showed tentative improvement in sentiment despite continued price pressure.

The Royal Institution of Chartered Surveyors said the house price balance remained at -14 in December, while buyer enquiries and agreed sales stayed negative.

However, three-month sales expectations jumped to 22 and the 12-month balance rose to 34, the strongest readings since late 2024.

RICS economist Tarrant Parsons said there were "tentative signs of a shift in sentiment," adding that "the key test for 2026 will be whether borrowing costs ease on a sustained basis."

Mould said the housing backdrop remained challenging, warning that the sector was still struggling to shake off "the post- and pre-Budget blues."

In the US, weekly data showed initial jobless claims fell by 9,000 to 198,000 in the week ended 10 January, while continuing claims declined to 1.88m, signalling ongoing resilience in the labour market.

Munnelly said US data had "not significantly altered expectations for a potential Federal Reserve rate cut mid-year," keeping global investors focused on sector rotation rather than macro shocks.

Chipmakers surge on back of TSMC results

In equities, European chipmakers surged after TSMC reported a 35% jump in fourth-quarter net profit, lifting ASM International, BE Semiconductor Industries and ASML Holding.

Mould said that while a record quarter was "an open secret," the details were "still striking," particularly the scale of capital expenditure, which suggested TSMC was "fully confident the AI boom has legs," underlined by guidance for 30% growth in 2026.

He added that TSMC's dominance meant it was "difficult for customers to diversify their supply chain even if they wanted to."

Elsewhere, VAT Group rallied after fourth-quarter sales beat forecasts.

UniCredit gained after dismissing reports it planned to buy a stake in Banca Monte dei Paschi di Siena as "speculative in nature and unjustified."

On the downside, Richemont traded lower after reporting third-quarter sales growth of 4% to €6.4bn, despite stronger constant-currency growth of 11% and solid performance in the UK and Italy, even as Munnelly noted the group had "exceeded sales forecasts, fuelled by strong jewellery demand and a recovery in China."

Reporting by Josh White for Sharecast.com.