European Markets Surge Amid AI Jitters and Geopolitical Talks

European shares rallied on Tuesday, propelled by strong performances in financial and healthcare stocks. The STOXX 600 index notched a 0.5% gain as investors monitored geopolitical dialogues and AI's potential impact on business models. The SMI index in Switzerland reached a new peak, advancing by 0.7%.

Banks continued to recover, rising by 1.3%, while healthcare stocks hit their highest since September 2024, increasing by 1.4%. The real estate index surged 1.8% to its strongest level since October. Geopolitical discussions, including U.S.-Iran nuclear talks and U.S.-mediated Ukraine-Russia peace talks in Geneva, were in focus.

Despite market optimism, defense, energy, and materials stocks faced declines due to falling crude and metal prices. AI-related uncertainty has investors evaluating potential disruptions, shaping a cautious market sentiment. Sectors like media, insurance, and technology showed resilience, while miner Antofagasta and travel retailer Avolta experienced contrasting fortunes.