Europe close: Stocks finish higher with defence names in focus

24th Jun 2026 17:31

(Sharecast News) - European shares finished slightly higher on Wednesday, with defence stocks in focus after a report that the German navy had abandoned plans to build a fleet of large frigates.

The pan-European Stoxx 600 rose 0.08% to 635.16.

Germany's DAX fell 0.62% to 24,740.36, while France's CAC 40 gained 0.54% to 8,385.49 and London's FTSE 100 advanced 0.31% to 10,461.63.

In commodities, Brent crude futures were last down 4.1% on ICE at $73.92 per barrel, while the NYMEX quote for West Texas Intermediate fell 3.82% to $70.41.

Danni Hewson, head of financial analysis at AJ Bell, said: "The FTSE 100 ticked higher as US technology shares recovered some of their recent losses, helping to support a bullish start on Wall Street."

US indices had closed lower on Tuesday as a global sell-off in chip stocks deepened.

The retreat followed a sharp reversal in technology sentiment at the start of the week and spread across global markets, with South Korea's benchmark down almost 10% after earlier rising 95% this year, while Japan's Nikkei 225 shed 3.55%, ending an eight-session winning streak.

Hewson said improved sentiment towards technology and artificial intelligence could be tested later by Micron Technology's quarterly earnings.

"Strong numbers could help address recent fears about the sustainability of the AI story, but a disappointing update could be a catalyst for widespread selling," she said.

Oil prices fell after US president Donald Trump accused large oil companies of "gouging" consumers and threatened a Department of Justice investigation, as he sought to shift attention away from his handling of the Iran war and its impact on the domestic economy.

Chris Beauchamp, chief market analyst at IG, said: "The carnage continues in oil prices. While there is still a week of June left, WTI and Brent are on track to suffer their biggest one-month fall since 2020.

"This delivers relief for consumers around the globe, assuming the oil industry can scramble to fill the gap left by months of disruption, but will deal a severe blow to the profits of the energy industry.

"At this rate, talk of OPEC output cuts can't be far away."

Hewson said oil prices continued to slide, with Brent falling below $74 a barrel "on signs of increasing traffic passing through the Strait of Hormuz".

"In London, property and housebuilding stocks were on the march, with energy stocks firmly out of favour thanks to the slump in crude," she said.

Beauchamp said commodities were the main focus for markets as both oil and gold came under heavy pressure.

"Gold's run above $4000 has come to an end, as the price endures its largest pullback for four years," he said.

"The parabolic move of late 2024, through 2025 and on into 2026 has firmly come unstuck.

"The bigger the party, the bigger the hangover, and gold is still working off its own exuberance."

German business sentiment improves in June

On the economic front, German business sentiment improved in June as companies hoped that the geopolitical uncertainty weighing on activity for much of the year was starting to ease.

The Ifo Institute's business climate index rose to 85.6 from 85.0 in May, in line with market expectations.

The current conditions index increased to 87.0 from 86.1, while the expectations gauge edged up to 84.1 from 83.9.

Ifo said manufacturing expectations had improved noticeably, although the sector's current climate remained depressed.

Sentiment also improved across services, trade and construction.

"Firms perceive the business environment as less uncertain," Ifo president Clemens Fuest said.

"German companies are hoping for geopolitical tensions to ease."

Carsten Brzeski, global head of macro at ING, said "hope is back", with both expectations and current assessments improving in June.

He said talks between Iran and the US on reopening the Strait of Hormuz were probably the real driver of the renewed optimism, although the Ifo index remained below its pre-war level.

Defence names in focus on Germany reports

In equity markets, TKMS surged 16.07% after Der Spiegel reported that Germany planned to abandon a multibillion-euro project to build six F126 frigates and instead buy eight smaller vessels from the German manufacturer.

Rheinmetall slumped 18.65%.

The company had been expected to become the lead contractor for the F126 frigate programme, in a deal worth as much as €12.8bn, taking over the contract from Dutch shipyard Damen Naval after years of delays.

Hewson said defence stocks had been "down in the dumps throughout Europe" after the report.

"Having been one of the best performing areas of the market in recent years, speculation Germany will abandon plans to build six warships has acted as an accelerant to recent weakness in the space," she said.

"If accurate, the reports may imply that some of the more optimistic projections about European military spending and the benefit that could pass on to big defence names were overdone."

Elsewhere, Segro jumped 17.44% after US logistics group Prologis said the warehouse landlord had rejected its £12.6bn all-share takeover proposal.

Reporting by Josh White for Sharecast.com.