European stock markets attract investors
The Stoxx 600 index has risen 11% this year, with regional benchmarks hitting record highs.
1European stock market rally
European stock markets are reaching record levels in the second half of 2026. The Stoxx 600 index has risen 11% this year, with regional benchmarks like Germany's DAX, France's CAC 40, and Italy's FTSE MIB hitting all-time highs. Helen Jewell, CIO at BlackRock, notes that Europe's resilience has surprised markets and demand remains much stronger than expected. Improving corporate earnings and economic momentum are supporting this rally.
2Growing investor interest in Europe
According to a Bank of America survey, 2% of fund managers are now overweight European equities, compared to 15% who were underweight in June. Citigroup analysis showed risk appetite improved most significantly in Europe in late July. Mark Haefele, CIO at UBS Global Wealth Management, suggests reviewing European stocks as earnings are beating expectations this quarter.
3Improving corporate earnings
European companies reported their best earnings growth in four years at 17%. About 75% of Stoxx 600 constituents are trading above their 200-day moving averages, near the highest levels in a decade. Semiconductor firms like ASML Holding and Infineon Technologies have surged over 60%, leading the index higher.
4AI adoption driving gains
European AI-adopting companies in Bank of America's basket gained 14% this year, outperforming US hyperscalers' 3% return. Firms like ABB, Standard Chartered, and E.On are benefiting from AI adoption. Citi strategist Beata Manthey notes investors are diversifying into cyclical sectors alongside tech, benefiting European stocks.
5Banking sector outperforms
The Stoxx 600 Banks index is among this year's top performers with a 22% rally. Investors are turning to banks and industrial goods as alternatives during AI trade volatility. European stocks now trade at 15x forward earnings, the smallest discount to the S&P 500 in four years.
6Risks and skeptics remain
Some investors remain skeptical about Europe's long-term growth potential. Ariane Hayate at Edmond de Rothschild warns Fed rate hikes could disrupt European stocks. However, Daniel Murray at EFG Asset Management believes skepticism has gone too far given strong macro growth and earnings outlooks.
7Oil prices and geopolitics
Easing tensions between Washington and Tehran boosted market sentiment, though concerns linger about the Strait of Hormuz. Oil prices have retreated from July peaks, alleviating inflation worries. Citi's Beata Manthey predicts clearing geopolitical uncertainty will unlock more demand for regional stocks.
8Europe's outlook
European stocks are delivering strong performance supported by improving fundamentals and growing investor appetite. Corporate earnings, economic momentum, and growth in AI-adopting sectors suggest the rally is sustainable. Investors are diversifying into banks and industrials alongside tech. This trend indicates European markets could remain strong through the second half of 2026.
Original article: Fortune — Avrupa borsaları yatırımcıları cezbediyor