European equity markets extended their record-breaking streak into a fourth consecutive week, as both the STOXX 600 and STOXX 50 indices closed the opening week of August in record territory. The advances build on momentum that has been supported by the European Central Bank's first rate cut in June, which began an easing cycle distinct from the Federal Reserve's still-paused trajectory.

By mid-morning Friday, the STOXX 600 had advanced 0.3% to 659.91 points. The STOXX 50 posted a 0.2% daily gain and finished the week with a 2.4% increase. For the full week, the STOXX 600 rose 1.4%.

The gains were underpinned by a robust earnings season. According to LSEG analytics, companies in the index are projected to deliver second-quarter earnings growth exceeding 22%, which would mark the strongest expansion rate since the third quarter of 2022.

Healthcare and Defence Lead Friday's Gains

The healthcare sector led Friday's session with a 1.8% advance. Genmab surged 9.6% after the oncology specialist reported higher first-half revenues and raised its annual forecast. Novo Nordisk, Abivax, and Zealand Pharma each gained between 3.4% and 4.6%.

Other notable movers included SAP, up nearly 3%; Rheinmetall, up 2%; AstraZeneca, up 1.6%; Novartis, up 1%; Czech defence manufacturer CSG, up 1.3%; and Airbus, up 0.8%.

CSG's advance followed a first-half revenue report that surpassed analyst expectations, driven by strong ammunition sales. The broader aerospace and defence sector rose 0.9% on the day and was on track to be the week's top-performing sector, gaining 5.8%. European defence companies have benefitted from sustained elevated military spending across the continent following Russia's 2022 invasion of Ukraine, with multiple NATO members increasing budgets toward or beyond the alliance's 2% of GDP target.

Kingspan Surges on Data Centre Demand

Kingspan was Friday's standout performer, jumping more than 15% after the construction materials company upgraded its annual profit guidance, citing surging demand from the data centre sector. The company's insulation and building envelope products are seeing increased orders as hyperscale cloud providers and AI infrastructure developers accelerate construction across Europe.

Not all companies fared as well. Munich Re declined 2.7% despite reporting a 6% rise in second-quarter net profit that exceeded market expectations. Stellantis fell 2.5% after Bernstein analysts downgraded the stock to underperform.

Oil Prices Rise on Middle East Tensions

Geopolitical developments in the Middle East drew investor attention. Brent crude futures climbed to $83.17 per barrel amid renewed concerns over the Strait of Hormuz, following Iran's proposal to restrict certain vessels from transiting the strategic waterway. Roughly one-fifth of global daily oil consumption routinely passes through the strait, making it one of the world's most critical energy chokepoints.

On the economic data front, Germany reported better-than-forecast industrial production and export figures.

Market participants remained cautious ahead of the upcoming US employment report, as strong job numbers could reinforce the Federal Reserve's case for keeping interest rates at current levels.

Gordon Kerr, European macro strategist at KBRA, noted that earnings results are validating the strength of European corporate fundamentals, while cautioning that markets are becoming increasingly selective as elevated valuations leave less room for underperformance.