European stock markets saw a modest increase over the summer, with large-cap stocks outperforming mid-cap and small-cap stocks. Healthcare stocks led the way in August, with Novo Nordisk gaining 15.2%. Large-value stocks in financial services and energy sectors also performed well. However, technology stocks saw a decline, dragging the sector down by almost 2%.

Small-value stocks are trading at a discount, with a price/fair value ratio of 0.78, indicating undervaluation. Financial services are the only overvalued sector, while consumer cyclicals, particularly automotive stocks like Renault and Stellantis, are trading at discounts of over 40%. Large-growth stocks remain slightly more expensive compared to large-value stocks.

Read more at Morningstar: European Value Stocks Outperformed Growth Stocks in August