European Stocks Surge Ahead in 2025
By Alun John
LONDON (Reuters) – European markets started strong in 2025, surpassing Wall Street performance due to inconsistent U.S. policies and significant fiscal changes in Germany. However, U.S. markets have since rebounded.
Market Performance Overview
The comprehensive European STOXX 600 index rose by 6.6% as of Friday’s close, which is slightly below the S&P 500’s 6.8% increase.
European Optimism
In March, the STOXX outperformed by 10 percentage points, igniting hopes among European investors that this could mark a turning point after years of lagging behind Wall Street.
Currency Dynamics
Despite the competition, the euro has shown a significant 14% increase against the dollar year-to-date, supporting the notion of European financial strength.
Investor Sentiment Shifts
Max Castelli, from UBS Asset Management, suggested that recent U.S. trade reforms and tax policies pose challenges for investment transitions from the U.S. to Europe, indicating that the era of European assets outperforming U.S. ones may not be entirely over.
Resurgence of Wall Street
According to Marija Veitmane at State Street Global Markets, Wall Street began to recover in mid-April as trade tensions softened, aided by a boost in corporate earnings announcements from tech leaders. The tech sector has gained 24% since early April, with Nvidia seeing a 45% increase.
Valuation Concerns
While many investors are flocking back to Wall Street, there is a pressing concern regarding high U.S. valuations. DWS’s Madeleine Ronner pointed out that European valuations appear more reasonable and that European earnings are beginning to grow, narrowing the valuation gap.
