In the frantic universe of the scholarship, yesterday’s certainties quickly take dust. Even last fall, asset managers did not bet heavily on European values - with a few exceptions – preferring them the champions of Wall Street. The experts in the Parisian square then had only one word in their mouths: “dropping out”. Between the German recession, the war on its continent, and a patent competitiveness deficit, Europe had decidedly few assets to highlight.
It was not necessary to wait for the arrival of the spring to see them change their rifle. The figures are indisputable. While the S&P 500 has fallen by 3 %since January 1, and the Nasdaq technological index by 7 %, the MSCI Europe jumped 14 %. “Since the beginning of the year, the flows that are redirected from the United States to Europe on the equity markets have been growing with the fastest speed ever observed,” enthuses Alexandre Baradez, market analyst in IG France. Senture confirmed by the boss of Euronext, Stéphane Boujnah, who testifies to an increase of 30 % of volumes since the start of the year compared to the average of 2024 on his platform, one with the main engine the American operators. So why hasn’t it seen anything coming?
The Trump postman
Admittedly, the valuation differences remain important between the two sides of the Atlantic, attracting investors in search of “good business” on the old continent. But this difference is not enough to explain this tilting. First, the first months of Donald Trump at the White House reserved their share of surprises. “On the subject of customs duties, the markets have kept the memory of a posture of Trump which was mainly negotiation during his first mandate, explains Alexis Bienvenu, managing the financial year of the chessboard. However, he seems to have been radicalized since … the whole question is whether this time must take it at the foot of the letter”. A perplexity exacerbated by the expectation of a pro -business policy – the republican candidate had promised disruption and tax cuts – which is slow to materialize.
It must be recognized, the American economic context has nothing to do with that of eight years ago. Debt has exploded, long rates are higher and growth is dried up. “Trump’s priority is to bring money back, in the hope of reducing the deficit and to finance its cuts in future taxes, points to Maxime Dupuis, investor of investment at ODDO BHF. Achieving this objective goes through customs duties and its plan to reduce federal expenses (DOGE), in its narrative. It cannot afford budgetary generosity.” And faced with this unpredictability, which the president cultivates through his incredible announcements, “Europe appears today as a haven of stability … Like what the United States was a year ago”, summarizes Stéphane Boujnah. Another good point for the old continent.
Finally, the foundations of “exceptionalism” of the American market have been weakened. The arrival of Deepseek, a Chinese AI rival, rebatted the cards in early 2025, encouraging some to moderate their exposure to technological value – the seven magnificent – which boosted the American Stock Exchange.
Defense, expenses, growth
Europe also takes advantage of its own assets. While we are starting to fear a recession across the Atlantic, the growth of the twenty-seven has been slightly revised upwards by JP Morgan and Goldman Sachs. An encouraging sign. The change of course was mainly budgetary: the end of the debt brake, German Totem, coupled at the European level for the financing of the defense, aroused hopes of new economic dynamism. A fortiori if the ECB pursues its policy of lower rates.
Defense companies were the big winners of this upturn. But more broadly, “many industrial sectors benefit from a renewed interest because the market already anticipates a runoff effect,” explains Alexandre Baradez. The construction sector in Germany, which could benefit from the country’s infrastructure plan, also follows the movement, notes Roland Kaloyan, head of the European actions strategy at Société Générale CIB. Supported by more remunerative interest rates, the values of the financial sector also record good performance.
A sustainable rebound?
How long will this European euphoria last? At least a few more months, agree to say the various managers interviewed. “As long as there is no more visibility on American trade policy and an improvement in indicators, investors will continue to turn away from the United States,” warns Alexandre Baradez.
For the time being, the American president, formerly very attentive to the signals of the markets, does not inflect his policy. But “at one point, there should be a Trump reminder force, says Alexis Bienvenu. He is surrounded by billionaires who have no interest in the stock market.” To what point will he hold his position?
Be careful, however, that in excessive pessimism does not follow unreasonable optimism. “This rebound is above all a catch-up effect between the two markets, after an episode where European actions were strongly sub-pondered from the United States”, nuance Roland Kaloyan. Alexis Bienvenu abounds: “This rise does not mean a total ‘rebirth of Europe’. Even with 1,000 billion euros in funding, Europe will not invent Nvidia or Microsoft, and it does not yet have a banking champion comparable to JP Morgan. In the long term, it will remain a minority in active benefits”. At the speed with which the wind turns, the case remains to be followed.
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