European markets reach a new high following Trump’s remarks in Davos

European stock markets extended a multi-session winning streak following President Trump’s speech in Davos. While the banking sector led broad gains, energy stocks remained under pressure.

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European stock markets extended their gains on Thursday following US President Donald Trump’s speech at his first virtual appearance at the World Economic Forum in Davos, Switzerland. He demanded that global interest rates be reduced and urged OPEC to lower oil prices. He also called for deregulation of banking rules.

The Euro Stoxx 600 rose 0.46% to €530.50, extending a seven-session winning streak to a new record high. The DAX climbed 0.74%, marking its eighth consecutive session of gains after repeatedly hitting new highs over the past seven trading days. The French CAC 40 advanced 0.7% to its highest level since 11 June, and the FTSE 100 was up 0.23%, also closing at a record high.

Banking sector rallies

The European banking sector (SX7P) rose 1.83%, leading the gains in the Euro Stoxx 600. Major financial stocks saw strong performances, with HSBC shares up 0.77% to their highest level since 2000, UBS rising 0.38% to a 16-year high, UniCredit climbing 2.53%, and Banco Santander advancing 2.45%.

Trump encouraged investment in the US by promising lower taxes and looser regulations. During a question-and-answer session, he urged US banks, particularly targeting Bank of America and JPMorgan Chase, to stop blocking political accounts. Trump also criticised European regulators for being too tough on US tech companies and oil producers.

Trump’s presidency is expected to benefit the banking sector due to his stance on loosening regulations for large lenders. He may urge to reduce capital requirements—the minimum amount of capital a bank must hold as mandated by regulatory authorities—and relax administrative processes. Such measures would encourage major banks to increase returns to shareholders through share buybacks and dividends.

Energy stocks drop as crude prices fall

European energy stocks extended losses as oil and gas prices continued to decline, following President Trump’s call on Saudi Arabia and OPEC to reduce prices on Thursday.

Shell’s shares fell 0.48%, BP’s dropped 0.59%, and TotalEnergies slipped 0.43%. The three largest European oil and gas producers have seen their shares decline throughout the week, mirroring trends in the oil markets.

Crude oil futures fell for the fourth consecutive trading day since Trump’s inauguration. WTI futures declined 1.09% to $74.62 per barrel, while Brent futures slid 0.9% to $78.29 per barrel, both reaching a two-week low.

President Trump suggested that high oil prices were funding Russia in the Ukraine war. “I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil,” he said on Thursday at Davos. “If the price came down, the Russia-Ukraine war would end immediately.”

His remarks followed his pledge to pressure Russia with sanctions and tariffs to end the war. At the event, Trump reiterated his intention to increase US oil and gas production to support the manufacturing sector, particularly in developing artificial intelligence and cryptocurrency infrastructure. He again emphasised that the US has unfair trade relations with the EU. In December, Trump threatened to raise tariffs if the bloc did not increase its purchases of US gas and oil.

Technology shares mixed

European technology stocks showed mixed performance on Thursday as the artificial intelligence-led rally faded. Trump unveiled a joint venture with tech giants to invest €480 billion in AI infrastructure in the US on Tuesday, which had boosted sector share prices earlier in the week. However, he did not give further indications on the build of the US tech advancement during his speech on Thursday.

Europe’s largest tech company, SAP, saw its shares steady at an all-time high of €262 on Thursday. However, Dutch AI chip equipment manufacturer ASML saw its shares slump 4.4%, amid concerns over potential export restrictions to China. Dutch Prime Minister Dick Schoof indicated during an interview with Bloomberg in Davos on Wednesday that the Trump administration might impose AI chip trade controls on China as strictly as those under the Biden administration.

Bitcoin slides

Trump signed an executive order on cryptocurrency and artificial intelligence, creating a working group to advise the White House on digital asset policies. The action disappointed Bitcoin enthusiasts, as Trump did not specifically order the establishment of a Bitcoin reserve, as he had previously hinted.

Bitcoin prices fell from just above $107,000 to just above $102,000 following the executive order. The world’s largest digital token rebounded slightly to $103,370 at 3:22 am CET on Friday.

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