European Markets Hit Record Highs as Earnings Overpower Geopolitical Risk

While geopolitical headlines regarding a proposed U.S.-Iran deal provided a backdrop of cautious optimism, market momentum remained firmly rooted in bottom-line performance. Analysts have aggressively revised profit projections, with second-quarter STOXX 600 earnings now tracking for a 21% increase—a significant jump from the 12.5% growth anticipated in early May. Deutsche Bank analysts noted that while the focus has shifted toward the mechanics of a potential regional agreement, including contested tolling rights in the Strait, the market continues to prioritize corporate resilience.

Individual sector performance highlighted this earnings-driven appetite. WPP surged 23.8%, putting the stock on track for its best daily performance since 1992 after the advertising giant surpassed organic growth estimates. Deutsche Telekom added to the momentum, climbing 5.7% following a €3 billion expansion to its 2026 share buyback program. In the defense sector, Renk climbed 5.5% on the back of strong order volumes, though peer Rheinmetall slipped 0.8% after trimming its 2026 sales forecast. Meanwhile, Hikma Pharmaceuticals gained 9.5% on steady operating profit growth, contrasting with a minor 0.3% retreat in technology stocks that tracked a broader global pullback in the sector.