Despite Europe’s strong start, analysts say US exceptionalism still dominates global strategy.
European stocks have had their second-best performance in 15 years, with significant contributions from major players like SAP, ASML, and LVMH, according to Barclays analysts. The region has benefited from stabilizing interest rates, encouraging early Q4 earnings reports, and a temporary halt on U.S. tariffs under President Donald Trump.
However, Barclays points out that the recent outperformance is a correction of last year’s significant underperformance, with the rally largely driven by a few large-cap stocks. Positive factors such as the ceasefire in Ukraine, Germany’s shift toward pro-growth policies, and France’s approved budget could further boost the region’s momentum.
Despite these developments, skepticism remains among global investors regarding Europe’s long-term growth potential. Barclays notes that many investors are hesitant to allocate funds into Europe due to concerns about its dependence on global trade and a perceived lack of internal growth drivers, especially compared to the U.S.
Although Europe may present some opportunities, the analysts emphasize that “U.S. exceptionalism remains the playbook” for most investors, as the U.S. economy offers more dynamic growth prospects.
