European markets delivered a robust rebound on Tuesday, February 3, 2026, as investors returned decisively to risk assets following the prior session’s uneven performance. Gains were broad-based across national and pan-European benchmarks, reflecting renewed confidence that January’s volatility may be giving way to a more constructive February outlook. While currency markets moved lower, equity investors largely looked past foreign exchange weakness, focusing instead on valuation opportunities and improving short-term momentum.

Broad Rally Lifts Core European Indices

The rebound was visible across all major equity benchmarks. The FTSE 100 surged 1.15% to 10,341.56, marking one of its strongest sessions of the year so far. Gains were driven by financials, energy stocks, and defensives, with investors favoring large-cap names offering stability and global revenue exposure. The FTSE’s performance underscores renewed appetite for U.K. equities despite ongoing currency fluctuations.
Germany’s DAX climbed 1.05% to 24,797.52, recovering further ground after last week’s sharp pullback. Industrial and export-oriented stocks led the advance, suggesting improving confidence in cyclical sectors as risk appetite returned. The DAX’s rebound highlights a shift away from defensive positioning toward selective growth exposure.
The EURO STOXX 50 rose 1.00% to 6,007.51, reflecting strong demand for eurozone blue-chip stocks. Financials and industrials were among the key contributors, reinforcing the view that investors are selectively rebuilding positions in large-cap names after recent consolidation.

Pan-European Measures Confirm Improving Participation

Beyond the headline indices, gains extended across broader regional measures. The MSCI Europe advanced 0.81% to 2,786.28, signaling that the rebound was not confined to a handful of markets. The move points to improving participation across sectors and geographies, a notable shift from the narrow leadership seen in late January.
The Euronext 100 Index climbed 0.69% to 1,783.36, reflecting renewed interest in Europe’s largest multinational firms. These companies, often favored during periods of stabilization, benefited from their diversified revenue bases and strong balance sheets.
France’s CAC 40 gained 0.67% to 8,181.17, supported by strength in industrials, financials, and consumer-oriented stocks. The advance helped the index reclaim ground lost during recent risk-off sessions and reinforced the broader recovery narrative.

Currency Weakness Fails to Disrupt Equity Momentum

While equities rallied, currency markets moved lower. The Euro Index fell 0.58% to 117.92, and the British Pound Index slipped 0.15% to 136.66. The softer currencies provided a supportive backdrop for exporters and multinational firms, helping cushion equity markets despite concerns around foreign exchange volatility.
The divergence between equity strength and currency weakness suggests that investors are currently prioritizing growth and valuation considerations over short-term currency signals. For many market participants, the weaker euro and pound were viewed as incremental positives for earnings competitiveness rather than sources of instability.

Outlook

Looking ahead, European markets appear to be regaining momentum as February gets underway, supported by broad participation and improving risk appetite. Investors will closely monitor upcoming economic data, corporate earnings reports, and central bank commentary to assess whether this rebound can be sustained. Key risks include renewed currency volatility, uneven global demand, and the possibility of profit-taking after today’s strong gains. At the same time, opportunities remain in high-quality large-cap stocks, financials, and cyclicals positioned to benefit from a stabilization in sentiment. As the month progresses, market direction is likely to depend on whether today’s broad rally evolves into a more durable trend or remains a tactical rebound following January’s turbulence.