USA

European stocks’ 2025 outperformance is over, but don’t forget the euro

By Alun John

In London (Reuters) -European Stocks 2025, irregular US policy -making and Germany’s generation once the Mali shift performed better than Wall Street, but the US markets were caught.

Compared to 6.8% for S&P 500, the wide European Stoxx 600 index increased by 6.6% this year from Friday’s closing.

In March, Stoxx was 10 percent of the European Bulls to think that the time may have time after the European markets have low performance after the European markets.

Better performance calls than Europe are still stealing in their currencies, but the euro has been increasing by 14% against the dollar to date.

UBS Asset Management’s Global Sovereign Markets Strategy Max Castelli President, trade negotiations and new US Tax Section and Expenditure Law from the United States and Europe.

“I don’t think the exception will come back with the same power and intensity.” “But I do not exclude the great performance period of European assets on the end of the US.”

Here is a view of how Europe’s performance against the United States has increased.

Big Tech is back

Marija Veitmane, Chairman of the Stock Research at State Street Global Markets, has become a trade negotiations of trade war “that Wall Street shares began to return in mid -April.

However, the “real turning point”, “Technology CEOs stood up and said,” Our earnings will be very strong. “

The technology is roughly one -third of the S&P 500, and the sector has increased by 24% since the beginning of April, even when US President Donald Trump announced its tariff plans.

Nvidia, the world’s largest company in the world by Market CAP, rose to an even more dramatic 45%and there is nothing to match in Europe.

Hold your nerve

However, in no way, all investors do not return to the Wall Street with S&P 500 at record levels, which shows that valuations are stretched.

“The tariff announcement showed how fast these high (US) values can change and how risky these high (US) values are.”

And although this gap is appropriate because of the slow increase in corporate earnings, “Europe’s (earnings per share) begins to grow again and the difference is decreasing, which should be reflected in values,” he said.

DWS sees that the US and Europe GDP growth is roughly similar in 2025 and 2026, which is more and more sustainable for European companies’ earnings.

Can you buy more defense stocks?

Investors caught European stocks, but this has largely focused on the same sectors – this year increased by 50% and banks increased by 28% and show that there is a lack of faith in the wider market.

Although BNP Paribas Exane estimates, two of them make up only 16% of the index, it constitutes more than 50% of the return of the Stoxx 600.

This is not surprising because NATO members agreed to increase defense expenditures and to a large extent in the case of Germany. However, values are stretched.

Germany’s Rheinmetall transactions are traded at a rate of earnings at more than 50 advanced price; Even Apple and Microsoft are only around 30.

Loving the Euro

The picture is clearer in the currencies where the Euro is at the highest level of four years and closed to $ 1.20.

At the beginning of the year, many analysts predicted that the euro would fall below one dollar thanks to what was seen as an insatiable demand for US assets at that time.

However, when this reversed, the euro began to appreciate, a movement that grows as US stock and bond holders and feared more of the weakness of dollars increased the risk of currency.

Now, the euro is expected to continue to win even if the US stops.

“Foreigners do not need to sell us assets to weaken the dollar to weaken the dollar, just to buy more ‘,” Deutsche Bank’s FX strategy president of the FX strategy of Deutsche Bank, there is no need to say. He said.

Currencies are important

This currency moves the equity investors and makes European shares more expensive for US investors and Wall Street.

S&P 500 may be at a record height for domestic investors, but it is priced as euro, 9% discount in February.

“The currency for Euro -based investors ate the returns of US assets this year.” He said. He continued: “If there is another disappointment in the worse Euro.”

On the other hand, the Stoxx 600 in local money terms is still afraid of the record of March, but it was priced in dollars, but in late June it reached the highest level of all time.

(Reporting by Alun John, Additional Reporting by Yoruk Bahcel;

European stocks’ 2025 outperformance is over, but don’t forget the euro

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