European stocks have outperformed their US counterparts since Trump’s inauguration amid expectations that a worst-case scenario trade war will be avoided, the Financial Times reports. The Stoxx Europe 600 index rose by 5.2% since 17 January, while the S&P 500 advanced by 2.5% and Nasdaq rose 1.7%. This marks the strongest start to a year for European stocks since the late 1980s and their best performance against the US in about a decade, FT reports, citing Bank of America analysts.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Behind the trend: Analysts attribute this development to Trump’s decision to hold off on imposing tariffs on the EU, along with the potential for peace talks in Ukraine. The European stock rally has also been supported by increased bank lending and lower interest rates from the European Central Bank, Chief Investment Strategist at Russell Investments Andrew Pease said. Other reasons include fund managers increasing their allocations to European stocks since the beginning of 2025.

The biggest gainers: Sectors such as finance, defense, and luxury goods have posted notable gains. Defense company Rheinmetall surged 28%, while luxury brand Richemont climbed 10% over the past month.

Some are now overweight on European stocks, including analysts at UBS, who upgraded their outlook on European stocks to overweight, citing potential lower energy prices if the Ukraine conflict ends, expansionary fiscal policy, and stronger corporate earnings.

But is it sustainable? Some analysts question whether the rally will last, as US tariffs may be delayed rather than permanently scrapped. Trump has signaled that European imports including cars, pharma, and chips could face 25% tariffs, following similar charges on Canadian, Mexican, and Chinese goods. Meanwhile, UBS analysts warn that European outperformance has historically been short-lived, urging investors to remain cautious.

Also seeing big gains so far this year: Hong Kong’s Hang Seng index has been the best-performing major market since 20 January, rising 15%. The surge was driven by a rally in Chinese technology stocks following the introduction of the AI platform DeepSeek. Elsewhere, China’s CSI 300 gained 3%, Japan’s Topix rose 2%, and India’s Nifty 50 declined 1% during the same period.

EGX30

30,915

+0.1% (YTD: +4.0%)

USD (CBE)

Buy 50.50

Sell 50.64

USD (CIB)

Buy 50.51

Sell 50.61

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,388

+0.6% (YTD +2.9%)

ADX

9,618

0.0% (YTD: +2.1%)

DFM

5,359

-0.4% (YTD: +3.9%)

S&P 500

6,013

-1.7% (YTD: +2.2%)

FTSE 100

8,659

0.0% (YTD: +6.0%)

Euro Stoxx 50

5,475

+0.3% (YTD: +11.8%)

Brent crude

USD 74.43

-2.7%

Natural gas (Nymex)

USD 4.23

+2.0%

Gold

USD 2,953

-0.1%

BTC

USD 96,646

+0.9% (YTD: +3.3%)

THE CLOSING BELL-

The EGX30 rose 0.1% at Thursday’s close on turnover of EGP 4.7 bn (29.3% above the 90-day average). Local investors were the sole net sellers. The index is up 4.0% YTD.

In the green: EgyptAlum (+5.5%), Orascom Development Egypt (+4.7%), and Palm Hills Development (+4.6%).

In the red: Beltone Holding (-3.1%), Eipico (-1.7%), and CIB (-1.2%).

CORPORATE ACTION-

Ezz Steel starts share buyback ahead of voluntary delisting: Steel manufacturer Ezz Steel will begin buying the shares of shareholders objecting to its voluntary delisting from the EGX and those looking to exit their holdings at EGP 138.15 per share via the special operations market, the firm said in an EGX disclosure (pdf). Shareholders have until Thursday to submit their selling orders.

Tags: