European shares close higher as financials, healthcare lead

The pan-European STOXX 600 index gained 0.5% to 621.29 points

European shares closed higher on Tuesday as financials and healthcare stocks led the market rally, while investors tracked geopolitical negotiations and assessed how AI disruptions could reshape business models.

The pan-European STOXX 600 index gained 0.5% to 621.29 points. Switzerland’s SMI gauge added 0.7% to a record high.

Banks extended gains from the previous session, gaining 1.3%, bouncing back from recent pressure despite being among last year’s top performers.

Healthcare stocks climbed 1.4% to their highest levels since September 2024, while the real estate sector index gained 1.8% to reach its strongest point since October.

Defence stocks slid 0.2%.

Energy shares dropped 0.6% as Brent crude declined more than 1%, while the basic materials sector shed 1.6% amid weakness in gold, silver, and copper prices.

Investor sentiment has been shaken recently over concerns that artificial intelligence applications could pressure margins in traditional businesses. The latest AI-driven jitters have rippled across sectors, including software, insurance and trucking.

The market is just trying to find which companies could be disrupted by AI, said Roland Kaloyan, head of European equity strategy at Societe Generale.

And so, what we are seeing is that the market has started to build a risk premium, because honestly, no one knows exactly what the impact will be for each company – if the company will be able to take advantage of AI or will have a part of the business that could be disrupted, Kaloyan added.

However, European markets managed to buck the negative global trend on Tuesday.

Sectors that had taken a hit at the height of the selloff in Europe such as media, insurance and technology were up between 0.8% to 0.9%.