European stocks hit record highs, with the Stoxx 600 surpassing its August high. According to DeepFlow TechFlow, on November 5th, European stocks broke through their previous closing record highs, continuing their recent outperformance of global markets. This rally was primarily driven by investors shifting from AI trading to defensive sectors, as well as a strong earnings season. The pan-European Stoxx 600 index rose 0.5%, surpassing its August high, led by mining and consumer stocks. Previously, the clear outcome of the US midterm elections triggered a general recovery in market risk appetite, and the index also rose sharply on Wednesday. Furthermore, the decline in international oil prices to below $100 per barrel also provided support for European stocks. Since the beginning of October, the pan-European benchmark index has outperformed the MSCI All Country World Index and is on track for its best quarterly relative performance since the first quarter of 2025. As the AI trading frenzy subsided, investors flocked to defensive sectors such as healthcare and consumer staples, benefiting the European market. Market focus will shift to the potential impact of the US midterm election results on the Iran war and tariff policies, as well as whether US policy adjustments are expected to boost the renewable energy sector and potentially put pressure on artificial intelligence transactions.