European small-cap stocks outperformed large caps in June and Q2, with some sectors experiencing losses

In June, large-cap stocks experienced significant losses, especially in defensive and cyclical consumer sectors. However, small-cap stocks outperformed large caps in both June and Q2. The Morningstar Europe Index lost 1.0% in June, with large-blend stocks being the worst performers. Conversely, small-cap stocks rose 1.6% in June and 8.7% in the last quarter.

The Morningstar Netherlands Index rose by 0.7% in June, driven by ASML Holding’s 3.6% gain. On the other hand, the Morningstar Switzerland Index declined by 2.1% in June due to Nestlé’s 10.3% fall. Large pharmaceutical companies like Roche also contributed to Switzerland’s poor performance.

The defensive consumer sector in Europe saw a decline of 5.5% in June, with beverage companies like Anheuser-Busch InBev and Diageo falling significantly. The cyclical consumer sector also suffered losses, with French luxury companies like Hermes International and LVMH Moët Hennessy Louis Vuitton weakening. Conversely, the energy sector advanced by 3.2%.

Healthcare remained out of favor, losing nearly 3% in June and 13.4% over the last 12 months. Industrials were one of the best-performing sectors during the quarter, gaining 10.5%. Investors are focusing on areas of structural growth, such as industrial companies exposed to the energy transition and data center construction.

Read more at Morningstar: European Small-Cap Stocks Outshine Large Caps in June