European stocks have emerged as the top trade in global markets amid a significant sell-off in US stocks this year. HSBC’s global equity strategist Alastair Pinder notes that the landscape shifted after the US elections, leading to an upgrade of Europe (excluding the UK) to overweight status and a downgrade of the US to neutral. While the US market has experienced a decline, European markets including France’s CAC 40, Germany’s DAX, and the Euro Stoxx 50 have seen gains of over 10%. Pinder attributes this shift to factors such as the US’s wavering support for NATO and Ukraine, prompting a positive outlook for the eurozone. As a result, Wall Street is turning towards European equities for better opportunities. Additionally, Germany’s plans for increased infrastructure and defense spending contrast with the Trump administration’s reduced military support for European allies. This shift towards European equities is also reflected in Bank of America’s survey, which shows a growing preference for global stocks over US equities. However, potential risks such as US tariff uncertainty and rising bond yields could impact the valuation of eurozone stocks going forward.
“Erm appears to be overbought.” StockStory strives to assist retail investors in outperforming the market. Ines Ferre, a senior business reporter at Yahoo Finance, provides insights. Follow her on X at @ines_ferre. For detailed analysis of recent stock market developments influencing stock prices, click here. Stay updated on financial and business news from Yahoo Finance.
