European markets continued their strong start to the year on Tuesday, January 6, 2025, building on momentum from the prior session as investors leaned further into risk assets. Equity benchmarks across the region advanced decisively, supported by improving sentiment around global growth, stabilizing inflation trends, and expectations that monetary policy conditions may become more supportive as the year progresses. The rally showed broad participation, signaling that early-January inflows are translating into sustained buying rather than a short-lived rebound.

DAX and Euro Stoxx 50 Lead a Second Day of Strong Gains

Germany’s DAX delivered one of the session’s strongest performances, surging 1.34% to 24,868.69. The move was driven by renewed demand for industrial, automotive, and technology-linked stocks, sectors that are highly sensitive to global growth expectations. Investors appeared increasingly confident that Germany’s export-heavy economy could benefit from improving external demand and easing financial conditions over the course of the year.

The Euro Stoxx 50 followed closely, rising 1.25% to 5,923.69, as eurozone blue chips attracted sustained inflows. Financials, industrials, and select consumer discretionary names led the advance, reflecting optimism around earnings resilience and balance-sheet strength among Europe’s largest corporates. The index’s follow-through gain reinforces the view that large-cap eurozone stocks are emerging as a preferred destination for early-year allocations.

Broad-Based Strength Confirms Improving Regional Sentiment

Gains were not confined to Germany and the eurozone core. The Euronext 100 Index climbed 1.04% to 1,759.75, highlighting strong participation among Europe’s multinational leaders. This advance underscores investor preference for scale, liquidity, and diversified revenue streams as portfolios are repositioned for the new year.

The broader MSCI Europe Index rose 0.56% to 2,677.02, confirming that strength extended across markets and sectors. While the gain was more measured than in headline indices, it reflects improving confidence across the region as investors move beyond the defensive positioning that dominated late 2024.

France’s CAC 40 added 0.20% to 8,211.50, showing steadier but still positive momentum. Gains in luxury and financial stocks were partially offset by softness in industrials, leaving the index modestly higher. The performance suggests that while enthusiasm is strongest in export- and growth-sensitive markets, risk appetite is gradually broadening.

In the U.K., the FTSE 100 advanced 0.54% to 10,004.57, breaking above a psychologically significant level. The move was supported by financials, energy stocks, and global-facing companies benefiting from renewed investor confidence and improved commodity sentiment.

Currency Movements Support the Risk-On Environment

Currency markets complemented the equity rally. The British Pound Index rose 0.61% to 135.41, reflecting confidence in the U.K. outlook and expectations of policy stability. Despite the stronger pound, U.K. equities continued to perform well, suggesting that sector strength and global exposure outweighed currency headwinds.

The Euro Index was largely unchanged, slipping just 0.01% to 117.24. The stability in the euro provided a supportive environment for eurozone exporters and helped maintain favorable earnings expectations for multinational firms. The absence of currency volatility allowed equity markets to remain focused on growth prospects rather than foreign-exchange risk.

Outlook

As the first full week of January unfolds, investors will look to upcoming economic data, inflation updates, and early corporate guidance to determine whether the current rally can be sustained. Key risks include potential shifts in global growth expectations, geopolitical uncertainty, and changes in monetary policy signaling. However, opportunities are emerging across European equities, particularly in industrials, financials, and large-cap exporters positioned to benefit from improving demand and stabilizing financial conditions. With momentum building and participation broadening, European markets appear to be entering 2025 with a constructive tone, supported by renewed risk appetite and a clearer focus on earnings and fundamentals.