European stock markets staged a powerful rally this week as London and Madrid surged to record highs, defying global uncertainty over future interest rate moves. The FTSE 100 and Spain’s Ibex 35 both set new all-time records on Tuesday, signalling renewed investor confidence across Europe’s financial centres, reportsThe WP Times.
The FTSE 100 climbed to 9,727 points before closing 0.44 per cent higher at 9,696.74, while Madrid’s Ibex 35 broke the 16,100-point barrier for the first time in nearly twenty years, ending up 0.54 per cent. Analysts said the rally reflected investor optimism that major central banks are nearing the end of their tightening cycles after months of monetary uncertainty.
Other European indices, however, remained more cautious. The EuroStoxx 50 slipped 0.12 per cent to 5,704.35, while the Swiss SMI fell 1.34 per cent to 12,360.15 amid sharp losses in the pharmaceutical sector, led by Novartis. The divergence underscores how closely markets remain tied to expectations about future rate moves and sector-specific pressures.
Andreas Lipkow, a Frankfurt-based strategist, described the surge in London and Madrid as “selective optimism built on solid value sectors.” “Investors are rotating back into traditional industries — energy, construction, and infrastructure — where earnings are tangible and valuations still make sense,” he said. “If US employment data again comes in strong, the optimism could fade quickly.”
Attention now turns to the week’s key central bank meetings. The US Federal Reserve announces its decision on Wednesday, followed by the European Central Bank and the Bank of Japan on Thursday. Christian Henke of IG Markets noted that these meetings “will shape global capital flows far more than the ongoing trade negotiations between Washington and Beijing.”
Spain’s record has a symbolic meaning, marking the first time since before the 2008 financial crisis that the Ibex 35 has passed 16,000 points. “It’s a psychological turning point,” said Javier Hernández, chief executive of Spain’s exchange operator BME. “It signals that investors are once again confident in southern Europe’s recovery potential.”
In London, traders view the FTSE’s rally as evidence of renewed global interest in UK equities, helped by steady corporate earnings and a weaker pound boosting exporters. Still, analysts caution that volatility could return if central banks hint at further tightening or bond yields climb again.
For now, Europe’s financial markets appear to be rewriting the narrative — proving that even in an era of inflation anxiety and fragile growth, confidence in the continent’s economic foundations remains intact.
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