Markets Catch a Breather: Europe’s STOXX 600 Hits a Record as Investors Mull Lagarde Exit Report and Russia-Ukraine Talks

Reuters and CNBC contributed to this report.

Global markets steadied on Wednesday as the AI panic that rattled traders last week cooled off and investors had time to sniff out the next big headline. The pan-European STOXX 600 jumped about 0.8% to a fresh high, lead-weighted by defence and mining stocks — the kind of safe, chunky names people buy when they want certainty, not drama.

Part of that calm came from a simple market mood swing: sell first, ask questions later has paused. Futures in New York were firmer, too, up roughly 0.6% after US indexes posted modest gains a day earlier. Traders said some of the worst of the AI-driven selling is behind us for now — at least until companies start reporting whether the tech mania actually ate their revenue. Short-term relief, not a breakout.

The plot thickened mid-day when the Financial Times ran a scoop suggesting Christine Lagarde might step down from the European Central Bank earlier than planned. Markets shrugged at first, but the political angle matters: who runs the ECB shapes rate expectations and capital flows across Europe. The euro slipped a touch on the news; German bond yields barely budged. That’s the market saying: headline = notable, but fundamentals still call the tune.

Meanwhile, diplomatic activity kept risk appetites in check. Talks between Russia and Ukraine rolled into a second day, which helped tilt flows toward defence names and away from more speculative bets. Any sign those talks find traction calms investors; any hint of breakdown spooks them right back.

Other market crumbs: oil crept up from two-week lows, gold steadied, and bitcoin nudged higher after a short slump. Asia saw modest gains where markets were open — and a lot of the region was on holiday for Lunar New Year, so the volume was light. That made the moves feel a little fragile: record highs, but on thin liquidity.

What to watch next: central-bank chatter (the Fed minutes are due), corporate earnings that will test the AI-disruption thesis, and whether the FT story about the ECB turns into a real leadership scramble. If Lagarde does go, the policy debate in Europe could tilt — and fast. If the Russia-Ukraine talks show progress, that’s fuel for a broader rally. If not, headline risk stays high.

Bottom line: traders took a collective exhale today. That doesn’t mean the storm is over — it just means markets are giving themselves a day to read the tea leaves.