Current Market Developments
The question of whether the renaissance of the European stock market has only just begun is currently a central topic for private investors and investors. Here are some key factors and developments shaping this discussion:
European Stocks on the Rise
In the first months of 2025, European stocks gained significantly while US stocks remained somewhat weak. The MSCI Europe Index rose by about 12% from January to mid-March, while US stocks fell by around 5% in the same period. This suggests that the momentum is shifting in favor of European stocks.
Historic Quarter
In the first quarter of 2025, European stocks showed impressive performance, with the STOXX Europe 600 Index increasing by 5.2%. Companies like Rheinmetall, Thales, and Leonardo recorded substantial gains.
Economic Conditions
Moderate Growth and Decreasing Inflation
The Eurozone is expected to experience moderate economic growth of about 0.9% in 2025, which could keep inflation under control. Experts anticipate that core inflation will fall to 2.2% by 2025 and potentially to 1.9% by 2027. Lower inflation could lead to declining interest rates, making stocks more attractive.
Interest Rate Situation
The prospect of falling interest rates could further strengthen European stocks. Historically, lower interest rates attract investors as stocks become more appealing compared to bonds.
Valuation Discount and Structural Change
Valuation Discount
European stocks continue to offer a valuation discount compared to US securities, presenting potential for further price gains. This discount could prove to be an opportunity for investors.
Structural Change
The weaknesses of the past decade, such as an unfavorable industry structure and restrictive financial policies, are beginning to change. These transformations could lead to competitive advantages in the long term.
Conclusion
The renaissance of the European stock market may indeed have just begun. The combination of moderate growth, declining inflation, a potential decrease in interest rates, and the valuation discount compared to US stocks creates a favorable environment for investors. Moreover, the structural changes in Europe could lead to a strengthening of the European stock markets in the long term. For private investors and investors, these developments are of central importance as they present opportunities for future investments.