European stocks set to record best year since 2021 amid resilient growth
It was also a good year for the ISEQ index of Irish shares which is set to close the year up over 34% compared to the start of 2025.
European stocks are set for their best year since 2021 amid resilient economic growth and the strongest showing in the banking sector in nearly three decades.
French shares edged lower and UK stocks were steady as the European benchmark was set to wrap up 2025 near record highs.
France’s CAC 40 was down 0.4% and the UK’s FTSE 100 was little changed as of 8:16am in London. Both markets will trade for a half session. Bourses in Germany, Italy, Denmark, Switzerland and Finland will be shut through the day.
Among individual movers, Seplat Energy Plc rose 11% as Maurel & Prom sold a stake in the energy firm at a premium.
The Stoxx 600 index is poised for its biggest annual gain since 2021 amid resilient economic growth and the prospect of higher fiscal spending in the region. Banks have been the best-performing sector, set for their strongest showing since 1997.
Danni Hewson, head of financial analysis at AJ Bell, said European stocks should maintain momentum into the new year.
“Investors have been looking beyond the usual suspects for value and diversification as the US dollar came under pressure and the world continued to be beset with geopolitical turmoil and fears of an AI bubble,” she said.
Trading volumes are expected to remain light, but history shows January could bring more volatility as investors return after the holidays.
It was also a good year for the ISEQ index of Irish shares, which is set to close the year up over 34% compared to the start of 2025. Among the top performers of the year on the index were budget airline Ryanair, the three pillar banks, and healthcare services firm Uniphar.
The three pillar banks saw significant increases in their share prices over the course of the year. Bank of Ireland’s shares are up nearly 86% over the course of the year.
PTSB’s share price increased by 96.5% over the course of the year, from about €1.44 at the start of January.
In November, the company announced that it was putting itself up for sale. The State still owns 57.5% of the bank.
AIB’s share price increased by more than 72% over the course of the year to about €9.18. During the summer, the State sold off its remaining shareholding in the bank following the bailout during the financial crisis.
Ryanair's share price increased nearly 55% over the year to just under €30. The airline’s strong share price in 2025 triggered a bonus for its chief executive Michael O’Leary.
Under his contract, if the share price hit over €21 for 28 straight days, he would be granted the option to buy 10 million shares in the airline at a price of €11.12 per share. These shares would be worth more than double based on their current market value.
Mr O’Leary would have to stay at Ryanair until 2028 to receive the share options.
There were some companies on the ISEQ index that saw declines in the share prices over the year. Kerry Group’s share price fell nearly 17% while Cairn Homes was down over 11%.
Glanbia and Kingspan had marginal gains of 8.8% and 5.1% respectively.
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