Europe’s Stock Market Rally Faces a Pause After Record Highs
Europe has been breaking record after record in 2025, especially after reaching new all-time highs. The EuroStoxx 50 closed at 5,464 points, matching levels last seen before the burst of the dot-com bubble.
Earlier this week, it set a new milestone at 5,533 points. However, after reaching those heights, the index pulled back by as much as 1.3%, following weeks of buying euphoria.
Given the stock market rally, it is only natural for a pause to occur as the market regains strength. This opens the door for the index to return to its buying zone at 5,250 points, a level just 3.8% away. Since the beginning of January, the EuroStoxx 50 has surged 13.81%, hitting the long-anticipated target of 5,520 points—the intraday highs of the 2000 dot-com bubble. Given this rapid ascent, it comes as no surprise that selling pressure has emerged.
Reaching historic highs so quickly and without any pause invites partial profit-taking, especially after the index closed a session below the previous day’s low—something that hadn’t happened in weeks. Wednesday’s market pullback in Europe was more of a rational adjustment than a cause for concern. After setting new all-time highs in a somewhat uncertain environment, a correction driven by profit-taking was expected.
European Market Outlook
This pullback was amplified by something entirely foreseeable yet ignored in recent weeks: U.S. tariffs, while not as severe as Trump’s rhetoric suggested, will still materialize to some extent. Additionally, the shifting U.S. stance on Ukraine has become increasingly perplexing, impacting risk premiums, which had been declining without any solid justification. This adjustment is seen as a moment of market rationality—a correction of excesses that led European stocks to retreat noticeably.
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