Will European stocks bounce back?

European stocks have looked unattractive for some time – will they bounce back?

Global stock market
(Image credit: Yuichiro Chino)

France’s CAC 40 share index has fallen 9% from a mid-May high. Paris has underperformed wider European markets, with the Euro Stoxx 50 index up almost 9% for the year-to-date. But for all the talk of European stagnation, “equities in Europe have delivered nearly as much” as US ones over the past few years, says Hubert de Barochez for Capital Economics

While US valuations have risen faster, European ones have kept pace thanks to improved earnings expectations and higher dividend payments. French stocks even outperformed US ones between the end of 2021 and June this year, before Macron’s snap election sank the Paris bourse. All is not lost. When America’s “AI bubble” eventually bursts, Europe could enjoy a renewed period of outperformance. Eurozone valuations are close to “historic lows” relative to frothy US stocks, say Oliver Girakhou and Carly Brewster of asset manager Robeco

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.