Wall Street strategists predict that European stocks could outperform US equities in 2025 – a development of great significance for private investors, savers, and retail investors. This assessment is based on several factors and market observations.
Background of the Forecast
Relative Valuation and Performance Potential
- Historical Comparison: According to analysts, European stocks could outperform significantly in 2025, a level not seen for two decades. The Stoxx Europe 600 benefits from strong corporate performance and attractive valuations compared to the somewhat overheated US markets.
- Valuation Gap: The current valuation differences between European and US stocks are particularly large. European companies are considered cheaper, which could provide advantages in a potential rotation towards value investments.
Macroeconomic Factors
- Growth Impulses: Despite global uncertainties, such as political developments in the USA or geopolitical tensions, growth impulses remain intact. According to current forecasts, a recession is being avoided.
- Trade Relations: The easing of trade tensions between the USA and the EU has recently sent positive signals to the markets. Both Wall Street and European indices have benefited from this.
Impact on Investment Strategies
Diversification and Allocation
- US Share in the MSCI World: The share of the USA in the MSCI World Index is nearly 70%, while its share of global GDP is only about 30%. For globally oriented investors, a stronger weighting based on GDP rather than index weighting may be advisable to better spread risk.
- Opportunities in Europe: The current forecast indicates that an overweight in European stocks might be sensible – especially for investors with a long-term horizon.
Risks and Opportunities of Other Asset Classes
- Precious Metals & Cryptoassets: Gold remains attractive in the long term, as geopolitical uncertainties can undermine trust in key currencies like the US dollar. Bitcoin also benefits from favorable regulation in the USA and uncertainties in the currency market; however, volatility remains high.
- Currency Effects: A rising dollar can exert short-term pressure on the euro, which may affect the returns on foreign investments.