The political mood in Europe may be printed, gloomy or even disappointed since Donald Trump has started his second term as president. But that is not noticeable at the European stock exchanges.
In fact: while Trump under the motto ‘America First!‘A whirlwind of policy changes and threats has unleashed, the European stock markets perform better than the American. The Pan-European Stoxx 600 index has risen by 5.5 percent since 17 January (the last trading day before Trump’s inauguration). On Wall Street, the S&P 500 did not get any further than an increase of 1.35 percent in the same period.
Investors on the European stock markets do not seem to worry about the uncertainty on the old continent, who blew Trumps vice president JD Vance in Munich again last weekend. In a much -discussed spoken, Vance Europe not only laughs hard the lesson, he even explicitly caused a doubt about whether Europe and US still have shared values. Great dismay in European politics. But investors in Europe prefer to look at the bright spots.
In Amsterdam, the AEX had just reached the record high of 946.58 points last week. As if a bloody war is still raging on the European continent. As if the political future in the Dutch Great neighbor and trading partner Germany on the eve of elections is not uncertain. And as if the American threat to start levying high import rates for European products is definitely off the table.
Cheap European shares
Yet there are explanations for the price increases in Europe. A first: European funds now cost so little that investors dive on it. “At the end of 2024, the point was that European shares were so cheap that the difference with the US in a price-profit ratio was 40 percent,” says Roelof Salomons, professor of investment theory in Groningen and head strategist at asset manager BlackRock in Amsterdam. “European shares were therefore on average 40 percent cheaper than American – while since the 1990s it had always been around 10 percent. Investors were actually already convinced that it would no longer be good in Europe. Only banks still did well. “
The banks are still doing well now, says Salomons, but now the whole of Europe is doing well on the stock exchange. Many of the negative sentiments were already in the races last year. So investors were open to positive signals at the beginning of this year.
The negative factors can pick up again
“Companies make good profits and it is expected that there will be more stimulating measures in Germany. It is possible that the brakes will also be released on new government debts, the so -called Debt. And with the possibility of a ceasefire in Ukraine, it is expected that energy prices may fall. And that would mean more growth, and less inflation. “
All this does not mean that it is structurally much better in Europe, warns Salomons. “You mainly see a change in expectations.”
Martine Hafkamp, director of asset manager Fintessa, states that a positive change has occurred at European stock exchanges. “But the negative factors can pick up again. Inflation has still not been reduced to 2 percent. Germany is awaiting elections, France is politically uncertain and the Netherlands is not overflowing with decisiveness. ” She points out that the threat of a trade war also hangs “like a sword of Damocles” above the markets. “But investors may see that mainly as the means of the Americans to achieve better negotiating results.”
In America, says Joost Schmets of the Association of Effecten owners, the rates are ‘so nose bleeding High, as they say there, that many investors no longer trust it. ” European stock markets, with their lower valuations, are therefore attractive. “And there is still a lot of money that is not ‘active’. Also private money, from people who have saved a lot in the corona period. Because the interest rates on savings are so low, that money now also thinks its way to the stock market. ”
Schmets discovers a new impetus in the European economy. The report in which former ECB president Mario Draghi warned the European countries in September that “huge investments” were needed to innovate and to prevent a “slow death struggle” of the economy, according to Schmets “the urgency has shown that we are now must continue ”. And even though listed companies are not an average reflection of the real economy, investors still seem satisfied with these developments.
Koen Bender, of Mercury Asset Management, characterizes the increase in European stock exchanges as “a” yoyo-rally. ” In other words: “You’re on your own. Europe, you have to take care of your own defense, Asia, you have to take care of your own artificial intelligence. ” Both in Europe and in Asia, in particular China, there has been a realization that new investments are needed. That means more money for – some – listed companies, which means that investors jump on it, and the rates are rising.
Bender: “In China, President Xi Jinping had a meeting with great technology entrepreneurs, including Jack Ma [van internetbedrijf Alibaba]. That was a signal from the communist party that she needs the tech companies, and the tech shares in China benefit from it. At the Amsterdam stock exchange this will continue to work, in the price rise of investment company Prosus. ” (Prosus is the major shareholder of the Chinese Tencent).
Investment expert Nico Inberg, Van Beursplatform Debeeldeelhouder.nl, summarizes the situation for Europe together with the well -known rule from the American economist Paul Romer: “A Crisis is a terrible thing to waste. ” Never leave a crisis unused.
This applies to the whole of Europe, which through Trump, the rates with which he threatens, and the war in Ukraine has enough crisis situations to take action. To begin with, the neighboring country with his faltering economy that is going to the polls this Sunday. “The Germans have the biggest problem. They now have to pull their wallets to invest. ”
That also helps the mood on the stock exchange.