Feb 16 (Reuters) - The STOXX 600 index edged higher on Monday, aided by gains in financial stocks ahead of data on industrial production, while investors geared up for fresh earnings releases later
STOXX 600 Gains as Financial Stocks Rally Ahead of Earnings Reports
Financial Market Overview
By Johann M Cherian and Ragini Mathur
Impact of AI on Financial Stocks
Feb 16 (Reuters) - The STOXX 600 index edged higher on Monday as financial shares rallied, with investors turning their attention to a busy week of corporate earnings that could shed light on the health of corporate Europe.
Upcoming Earnings Reports
The pan-European index closed 0.13% higher at 618.52 points, with Spain's bank-heavy benchmark leading gains among regional markets, rising 1%.
Economic Indicators
European shares hit a volatile patch in late January and through early February on worries that newer artificial intelligence tools could squeeze profits of traditional businesses.
FINANCIALS RISE AS AI FEARS RECEDE
However, a better-than-feared earnings season, in the face of steep U.S. tariffs, helped the STOXX index to touch a record high last week and log its third-straight week of gains.
Banks and insurance stocks had been mired in AI-disruption worries last week, with the lenders index logging its biggest one-week drop since late-March 2025. On Monday, lenders bounced back with a 1.4% rise, while insurance stocks added 0.7%.
"The AI scare trade is on hold as we start a new week," said Kathleen Brooks, research director at XTB.
"There is a growing sense that fears about AI swallowing up large swathes of global jobs and industries are overdone and this week could see a recovery in some of the sectors that have seen the worst of the selloff."
The rebound in heavyweight banks offset weakness in the technology and luxury sectors, which dropped 1% and 1.9%, respectively.
Shares of French software company Dassault Systemes declined 10.4%, driven by investor worries over the company's challenging 2029 revenue and cloud targets.
Basic materials shares were also down, losing 0.6% after their recent strong run.
RESULTS DUE LATER THIS WEEK
With Monday relatively quiet on the earnings front, attention now shifts to results due later this week from Orange, Zealand Pharma, Airbus and BE Semiconductor.
So far, 60% of European companies have beaten earnings expectations, compared with 54% seen in a typical quarter, according to data compiled by LSEG. Further, earnings are expected to have fallen 1.1%, versus about a 4% drop earlier in the month.
On the economic front, euro zone industrial production rose 1.2% year-on-year in December, down from a 2.5% increase the prior month, at a time when investors are anticipating that fiscal stimulus measures are reviving the sector.
Among others, Orsted gained 4.5% after brokerage Kepler Cheuvreux raised the Danish offshore wind developer to "buy" from "hold".
(Reporting by Johann M Cherian and Ragini Mathur in Bengaluru; Editing by Mrigank Dhaniwala and David Holmes)
