Positive.价Neutral.
From Morningstar: 2025-07-01 12:12:00
Key themes for European stock markets in Q3 and Q4 include Germany’s spending plans boosting EU industry, expectations of more rate cuts, and focus on utilities and defense stocks. European and UK equities have outperformed US counterparts in 2025, driven by trade war challenges and escalating conflicts in the Middle East.
Investors are looking at whether the positive trends from the first half of 2025 will continue in the third and fourth quarters. Structural factors like Germany’s fiscal reforms, rising defense budgets in Europe, and stability in UK bonds are fueling the positive run in European equities.
European mid-cap stocks are favored for their competitive advantage, while global utilities, like Spain’s Iberdrola and National Grid in the UK, are expected to deliver strong returns. UK large caps, particularly in defense and consumer discretionary sectors, are also seen as having upside potential.
The European Central Bank has cut interest rates four times in 2025, while the Bank of England has cut twice, with key interest rates in the UK more than double those in the eurozone. Analysts are divided on whether the ECB will make one or two more cuts this year, as inflation nears the 2% target.
Market pricing suggests two interest rate cuts from the Bank of England this year, despite inflation being above target. Eurozone inflation is back at the ECB’s target of 2%, while the UK’s CPI rose by 3.4% on an annual basis in May. Key Themes for European Stock Markets in Q3 and Q4: Germany’s spending plans to boost EU industry, more rate cuts expected, focus on utilities and defense stocks. Goldman Sachs predicts Bank of England easing, interest rate cuts support equity markets by lowering borrowing costs for companies and consumers.
Global Trade Wars Are Still Raging: ECB President highlights risks to Europe’s prosperity due to global order shift, protectionism, and uncertainty. UK has preferential trade deal with US, while EU faces tariffs. Vontobel Asset Management predicts market volatility until trade deal is reached. Eurozone GDP growth forecasted to match US by 2026.
Read more at Morningstar: Where Next for European and UK Stock Markets in 2025?