(Finance) – Europe offers a unique combination of developed economies and emerging marketswhich is attracting investors. Despite the focus on AI-related markets, European large-cap stocks have posted strong gains, with the index STOXX Europe 50 up 15% since the beginning of the year. Companies such as ASML, LVMH, SAP and Novo Nordisk reported better-than-expected earnings, highlighting the diversification of the European stock market.
“In this way the European stock market appears more diversified and it differs positively from the US one in terms of concentration; where much of the growth of the index has been focused in the technology sector – explains Francesco Bergamini, Head of Freedom24 Representative Office in Italy -. The outperformance of European large-cap stocks versus the broader US stock market is in fact a trend that has been ongoing since late 2022. This data is somewhat overlooked due to the predominance of American mega-cap tech stocks. However, strong earnings from European companies, combined with more attractive valuations compared to their US peers, contributed to superior relative performance.”
The European Central Bank, with its rate-cutting policy, will further support the market, while Clean energy companies like Vestas and Alfen are poised to grow with the improvement of the geopolitical and economic context.
“Investing in Europe is not a monolithic experience – continues Bergamini. – The continent is divided into different areas, each characterized by its own market maturity and investment potential. For example, Western Europe is characterized by stable and well-developed markets, with lower risk and stable returns. On the contrary, Eastern Europe offers higher growth potential, although with greater volatility and risk”.
Emerging markets in Europe are a great reference point for investors looking for growth. Countries such as Poland, Hungary and the Czech Republic have recorded significant economic progress, supported by political stability and favourable investment policies.
Europe is also at the forefront of technological innovation and sustainable development, offering unique investment opportunities in these sectors. The pursuit of green energy, financial technology and biotechnology offers new opportunities for investors.
Although macroeconomic indicators may be unsatisfactory due to still high interest rates, European equity investors show cautious optimismMore attractive valuations compared to the US market, potential macroeconomic improvements, lower energy costs and the prospect of a rate-cutting cycle suggest that European stocks could continue their strong performance from the start of the year.