STOXX 600 headed for biggest quarterly rise in five years

The pan-European STOXX 600 index was up 0.6% at 639.79 points

European shares ‌opened higher on Tuesday and were on track for their biggest quarterly rise in more than five years, boosted by optimism around artificial intelligence and signs of easing tensions in the Middle East.

The pan-European STOXX 600 index was up 0.6% at 639.79 points, ​as of 0857 GMT, and hovered near a record high. The benchmark is poised for a third straight ​monthly gain and has jumped 9.7% for the quarter, its strongest such performance since October 2020.

Technology ⁠stocks gained 1.7% and were set for their biggest quarterly jump since October 2001, underscoring robust demand for AI infrastructure.

Chip equipment maker ASML ​added 3.3% on Tuesday, while chipmakers STMicroelectronics and Infineon rose 2% and 2.3%, respectively.

Shares of Siemens Energy advanced 4.8% after the AI-equipment maker reiterated strong demand trends at a quarterly earnings call on Monday.

What’s different about Europe is: you’re not being paying ​for that economic growth commonly and with companies that are less exciting than U.S. tech, or maybe Asian ​semis, that’s creating quite a lot of opportunities in attracting value stocks, said Rob Lancastle, portfolio manager at J O Hambro Capital ⁠Management.

Around the rest of the world, you often pay a lot more and you have a lot more earnings risk, he added.

World equities have rallied this quarter on AI enthusiasm, with Asia and U.S. leading the charge, while Europe’s smaller exposure to the tech sector has resulted in it playing catch up for most of this ​period.

Signs of easing Middle East ​tensions have also been ⁠a key driver this quarter as prices of oil slid to pre-Iran war levels, prompting Barclays and J.P. Morgan to turn bullish on European stocks.

Travel and leisure stocks, which had taken a ​hit due to the war, also bounced back and are up over 19% ​this quarter.

Focus is ⁠on the ongoing annual European Central Bank conference, where investors are awaiting commentary from policymakers for clues on the outlook for monetary policy. Traders anticipate European interest rates to rise by another 25 basis points by year-end, according to LSEG-compiled data.