European Equities Gain Momentum as Trump's Tariff Policies Shift, Sparking Investor Interest and Outperforming US Benchmarks

European equities are experiencing a surge in investor interest, fueled by shifts in U.S. President Donald Trump's tariff policies. This has led to optimism regarding a potentially smaller tariff impact on European companies. Policy uncertainties in the U.S. have triggered sell-offs in the S&P 500 Index and the dollar. Europe's political landscape is stabilizing, with Germany planning significant stimulus measures and increased unity on defense spending. Corporate earnings are projected to improve. Investor allocation to European stocks has increased, but some metrics suggest further potential for growth. The Euro Stoxx 50 is up 12% this year, outperforming the S&P 500. The Stoxx Europe 600 Index is also outperforming the US benchmark. Strategists suggest a new era of outperformance for European assets, with inflows into European equity funds reaching levels not seen in almost a decade. Investors appear to be shifting funds from the U.S. to European and Chinese stocks.