European equities rallied on Wednesday, with the Euro Stoxx 50 up 2.3% and the broader Stoxx 600 advancing nearly 2%, their strongest gains since May 6. The move came in the wake of the US midterm elections, where Democrats won control of both houses of Congress, lifting overall risk appetite. Banks, luxury goods producers and renewable energy companies led the advance, buoyed by falling bond yields and expectations that the new balance of power in Washington could curb the Trump administration’s fiscal ambitions. Renewable energy stocks were particular standouts, with Orsted gaining 5% and Vestas rising 3.1%, as investors judged the Democratic victory to be supportive of clean-energy investment. By contrast, defence stocks underperformed on concerns that the shift in congressional control could limit further increases in US defence spending and, in turn, shape European defence outlays.