Source: Fortune.com
Summary
European stocks are experiencing a rally, with the Stoxx Europe 600 Index gaining every day last week. Fund managers are optimistic about the region’s resilience and improving fundamentals, with earnings growth at 17% and economic momentum at its strongest since March 2023. Strategists see this rally as more durable than a short-term trade, with a shift in market metrics across the board. European semiconductor-related firms have jumped over 60% in 2026, and the Stoxx 600 now trades at a valuation of 15 times forward earnings.
Our Reading
The numbers tell one story. European stocks are on a tear, with a record-breaking run in the second half of 2026. Fund managers are overweight on European equities, and risk appetite has improved. The Stoxx 600 has rallied 11% this year, with regional benchmarks hitting all-time peaks. But some market participants remain skeptical about Europe’s longer-term growth potential compared to the US.
Helen Jewell, international chief investment officer at BlackRock, notes that “the region’s resilience has surprised the market.” Mark Haefele, chief investment officer at UBS Global Wealth Management, thinks it’s time to review and potentially add to European equities. Beata Manthey, head of European equity strategy at Citigroup, says that “investor sentiment was being hampered by geopolitics, but as that clears up, it will unlock more demand for regional stocks.”
The rally is being driven by a broader swath of stocks, with about 75% of the Stoxx 600’s constituents trading above their 200-day moving average. European semiconductor-related firms are among the biggest drivers of the Stoxx 600, with ASML Holding NV and Infineon Technologies AG jumping over 60% in 2026. The Stoxx 600 Banks index has gained 22% this year, making it one of the biggest gainers.
But some, like Ariane Hayate, a fund manager at Edmond de Rothschild Asset Management, remain cautious about the impact of potential Federal Reserve rate hikes on European stocks. Daniel Murray, deputy chief investment officer at EFG Asset Management, thinks that investor skepticism on European stocks had gone too far given the outlook for strong macro growth and solid earnings.
Author: Evan Null
