European stockmarkets poised to race ahead
European stockmarkets are being tipped to outperform the US for the rest of the year, and into next year too.

“Global investors have had little love for Europe in the past decade,” says Nicholas Jasinski in Barron’s. “Anaemic” growth and political instability “have kept a lid on European stocks”. Yet with reopening gathering pace, “the near-term case for relative outperformance by Europe now is the strongest in years”. The pan-European Stoxx 600 index ended the first half of the year last week with a 13.5% gain.
Pack your vaccine passport
Last week the EU launched its vaccine passport, providing a shot in the arm for the tourism industry ahead of the summer season. Brussels and London are working on mutual recognition of the NHS Covid Pass. More than half of the EU’s population has now received at least one dose of a Covid-19 vaccine, with countries such as Germany, the Netherlands and Spain currently outstripping the US on this measure.
European data has surprised on the upside recently, says a Morgan Stanley note. The European Commission’s economic sentiment indicator is at a 21-year high. The US has now passed through the fastest phase of its recovery and there is nervousness about the outlook for monetary policy, says Jasinski. By contrast, Europe’s recovery is only just starting. Indeed, it is “one of the few developed regions” tipped to “see better GDP gains in 2022 than in 2021”. On 16.5 times 2022 earnings the Stoxx 600 is also a welcome remedy for US “valuation vertigo”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

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
Most investment banks are tipping European markets to outperform the US for “the remainder of the year and into 2022”, says Elliot Smith for CNBC. US fund flows into European stocks so far this year have been the strongest in six years. BNP Paribas’s strategists think easy monetary policy and a broad-based recovery will benefit Europe’s numerous value stocks: the banks, carmakers and energy companies that have been left behind as US tech has soared over the past decade. European shares look well-placed to benefit from the next stage of the recovery, agrees David Brenchley in The Times. Sectors “such as payments, medical technology and green energy” also look promising.
The bull case for Europe extends beyond reopening, says Graham Secker in the Financial Times. Europe’s post-pandemic recovery fund, which has seen member states issue joint bonds for the first time, is a “game-changer”. The fund’s slow rollout has drawn unfavourable comparisons with the much bigger US fiscal stimulus. But while America has created a short-term consumption surge, the European plan is “more focused on longer-term investment” in areas such as digitalisation and provides extra help to weaker peripheral economies. The five-year time horizon should also mean it provides a more consistent tailwind for European equities in the coming years.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
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.
-
Pinewood Technologies: a drive for growth
Pinewood Technologies’ platform is one of the best in the business. Investors should buy in
-
'EV maker Faraday Future will crash'
Faraday Future Intelligent Electric is failing dismally to live up to its name, says Matthew Partridge
-
Investors should cheer the coming nuclear summer
The US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with follies
The best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuation
AEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefully
Shares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?
-
The Palace of Westminster is falling down
The Palace of Westminster is in need of repair, but the bill is prohibitive, says Simon Wilson
-
'It’s time to buy British equities'
Opinion There is no better place to start investing in UK equities than with two of MoneyWeek’s favourite investment trusts, says Max King