CAC 40 Stages a Comeback While DAX Hits Record High in 2026 Market Rally
- How Did Major European Indices Perform Today?
- Which Stocks Stole the Spotlight?
- What Do the PMI Numbers Reveal About Europe’s Economy?
- Why Are Markets Defying Economic Headwinds?
- What’s Next for European Markets?
- European Markets FAQ
European markets wrapped up the second trading session of 2026 on a high note, with France’s CAC 40 clawing back losses to finish 0.32% higher at 8,237 points. Germany’s DAX stole the show, closing at a historic peak of 24,910.36 points, while the EuroStoxx 50 edged up 0.13%. Retailer Next surged 4.43% in London after bullish forecasts, and Valneva rocketed 11.2% in Paris on upgraded analyst targets. Meanwhile, Nexans tumbled 4.45% on project delays. Mixed PMI data across Europe and softer US service sector growth added nuance to the rally.
How Did Major European Indices Perform Today?
European markets delivered a textbook case of resilience on January 7, 2026. The CAC 40, after lagging most of the session, staged an impressive reversal to close 0.32% higher at 8,237 points – proving that French stocks still have some fight left in them. Across the Rhine, Germany’s DAX continued its bullish streak, notching a fresh all-time closing high of 24,910.36 points. "The DAX’s momentum reminds me of Bayern Munich’s football dominance – once they start winning, they just keep breaking records," quipped a BTCC market analyst during our afternoon briefing.
The broader EuroStoxx 50 index posted modest gains of 0.13% to 5,931 points, while London’s FTSE 100 played catch-up after the holiday break. TradingView data shows the Stoxx Europe 600 also hit record territory, confirming the broad-based nature of this rally.
Which Stocks Stole the Spotlight?
Three companies dominated trader screens today. EssilorLuxottica and STMicroelectronics led the CAC 40 charge, but it was Valneva that truly electrified Paris trading. The vaccine Maker skyrocketed 11.2% to €4.19 after Stifel analysts nearly doubled their price target to €10 – implying a staggering 165% upside potential. "When analysts make moves like that, you know they’ve seen something special in the pipeline," remarked a floor trader at the Paris Bourse.
London’s standout was Next PLC, which jumped 4.43% to 14,192 pence after hiking its sales and EPS guidance for the fifth time this fiscal year. Their Christmas sales figures told the story – an 11% surge in full-price sales versus last year’s 7% forecast. Meanwhile, Nexans became the day’s cautionary tale, plunging 4.45% after delays hit its Greece-Cyprus submarine cable project.
What Do the PMI Numbers Reveal About Europe’s Economy?
The latest Purchasing Managers’ Index (PMI) data painted a nuanced picture. Eurozone composite PMI slipped to 51.5 in December from November’s 52.8, missing the 51.9 consensus. Germany mirrored this trend with a 51.3 reading (vs. 52.4 previously), while France’s private sector activity flatlined at 50 after November’s 50.4 growth. "These numbers suggest Europe’s economic engine is idling rather than stalling," noted our BTCC research team.
Stateside, the US composite PMI came in at 52.7 (vs. 53 expected), with services growth hitting an eight-month low. The dollar capitalized on this softness, pushing the euro down 0.21% to $1.1690 by closing bell.
Why Are Markets Defying Economic Headwinds?
Today’s rally despite mixed economic data highlights what I’ve come to call the "January Effect 2.0" – institutional investors front-loading their annual allocations while retail traders jump on year-end bonus investments. The DAX’s record close particularly fascinates me; German industrials seem to be pricing in some magical resolution to the energy crisis that the rest of us haven’t seen yet.
Historical context matters here: The last time we saw this divergence between PMIs and equity performance was in early 2021, when markets anticipated post-pandemic rebounds. Could investors be betting on another economic inflection point? TradingView charts suggest the smart money is positioning for exactly that scenario.
What’s Next for European Markets?
With Germany reporting flat December CPI (1.8% YoY vs. 2% expected), the ECB faces less pressure to hike rates aggressively. This creates a Goldilocks scenario for European equities – warm enough growth to support earnings, but cool enough inflation to keep central bankers tame. My prediction? We’ll see the DAX test 25,000 before Valentine’s Day, while the CAC 40 plays catch-up to reclaim its 2025 highs.
This article does not constitute investment advice. Market data sourced from TradingView and Bloomberg.
European Markets FAQ
What caused Valneva’s stock to surge today?
Valneva jumped 11.2% after Stifel analysts raised their price target to €10, citing strong pipeline potential in their vaccine development programs.
How significant is the DAX’s record close?
The DAX’s 24,910.36 close marks its highest level in history, continuing a strong start to 2026 that’s outperformed most European peers.
Why did Nexans shares drop sharply?
Nexans fell 4.45% due to delays in its Greece-Cyprus submarine cable project, though management emphasized they’re working closely with Greek authorities to revise timelines.
