European shares reached a record high for the third straight session on Thursday, boosted by hopes for a US-Iran peace agreement and solid corporate earnings.
The pan-European Stoxx 600 index climbed 0.2% to finish at 658.19, after briefly hitting 660.91 during trading. Stock indexes in Spain, France, and Italy also set new records.
Geopolitical optimism fuels market gains
Investors set aside ongoing geopolitical risks, concentrating on signs of easing tensions in the Middle East. A proposed agreement between Iran and Oman, aimed at ending five months of conflict, includes a key provision: Iran would oversee ships entering the Gulf through the Strait of Hormuz.
A senior Iranian source and two regional officials shared the details with reporters. The possibility of reduced tensions has already improved market sentiment, even before any official deal is signed.
“We haven’t secured a peace deal with Iran yet,” said Michael Field, chief equity market strategist at Morningstar. “But investors aren’t waiting. They’ve already pushed equity markets to all-time highs.”
Earnings season exceeds expectations
Corporate results contributed significantly to Thursday’s gains. Second-quarter earnings for the Stoxx 600 are now projected to increase nearly 21%, up from the 12.5% forecast in May, according to LSEG data. Analysts have raised profit expectations as companies deliver stronger-than-anticipated performance.
Field noted that while earnings provided a lift, the economy’s strength has also bolstered investor confidence. Recent eurozone growth figures showed resilience despite higher energy costs tied to the Iran conflict.
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Deutsche Telekom led the gains, rising 6.3% after expanding its 2026 share buyback program by €3 billion to a total of €5 billion. The telecom sector followed with a 2.9% increase.
WPP, the advertising group, saw its largest daily gain since 1992, jumping 28.6% after surpassing organic growth estimates. CEO Cindy Rose stated that the company’s stabilization efforts were progressing as planned.
Not every report was positive. Rheinmetall declined 3.5% after lowering its 2026 sales outlook, while Siemens dropped 4.5% despite record quarterly profit, as its digital industries division fell short. Hikma Pharmaceuticals, however, climbed 8.2% after reporting a 9% rise in half-year core operating profit.
The market’s response indicates a preference for long-term stability over immediate disappointments. If the US-Iran deal moves forward, it could ease supply chain pressures and lower energy costs, potentially extending the rally. For now, earnings remain the main focus, with companies demonstrating greater adaptability than anticipated.
The aerospace and defense sector slipped 0.8%, affected by mixed results from major firms. Renk, a defense company, rose 5.8% after its second-quarter orders exceeded expectations.
As earnings season continues, analysts will monitor whether the trend persists or if geopolitical developments begin to dominate corporate performance.