Investing.com — European equities are attracting increased interest from global investors as stronger earnings, improving economic data and broader market participation support expectations that the rally could continue, Bloomberg reported.
The Stoxx Europe 600 Index rose during every session last week, its longest winning streak since June. The benchmark has gained 11% in 2026, while Germany’s DAX, France’s CAC 40 and Italy’s FTSE MIB have reached record highs.
European corporate earnings increased 17%, the strongest growth in four years, while regional economic momentum reached its highest level since March 2023.
“There is definite excitement about Europe,” said Helen Jewell, BlackRock’s international chief investment officer for fundamental equities. She said economic resilience and demand had exceeded market expectations.
Investor positioning has shifted sharply. A Bank of America survey found that a net 2% of fund managers were overweight European equities, compared with a net 15% who were underweight in June.
The rally has also broadened beyond a small group of companies. Around 75% of Stoxx 600 constituents trade above their 200-day moving averages, near the highest proportion recorded over the past decade outside major post-crisis recoveries.
Cooling tensions between Washington and Tehran have improved sentiment, while lower oil prices since July have reduced inflation concerns. Uncertainty about a complete reopening of the Strait of Hormuz remains a risk.
Artificial intelligence is another major driver. ASML and Infineon Technologies have gained more than 60% this year as investors seek semiconductor exposure.
Companies expected to improve margins by adopting AI are also advancing. A basket containing ABB, Standard Chartered and E.On has gained 14%, compared with a 3% rise among U.S. hyperscalers.
European banks have climbed 22% as investors seek alternatives to volatile U.S. technology stocks.
The Stoxx 600 now trades at 15 times projected earnings, its smallest discount to the S&P 500 in four years. Possible Federal Reserve rate increases and doubts about Europe’s longer-term growth remain key risks.
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