{
  "id": 5595159,
  "title": "Hot European Summer",
  "url": "https://urgent.news/2026/09/04/hot-european-summer",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-04T16:33:06.000Z",
  "source": {
    "name": "Net Interest",
    "slug": "net-interest",
    "url": "https://www.netinterest.co/p/hot-european-summer"
  },
  "original_language": "en",
  "account": "In the aftermath of a month-long beach vacation, European portfolio managers returned to their offices this week to find their home market thriving. Over the past few months, European equities have been on an impressive surge, surpassing global counterparts, particularly for larger Continental European firms where the Euro Stoxx 50 is outpacing the S&P 500. Despite facing a tariff shock and an energy supply crisis since the beginning of 2025, Europe has managed to perform strongly. The banking sector, often considered a value trap, has outperformed US megacap technology stocks significantly since 2022. Strategists at Goldman Sachs dub Europe \"the secret outperformer\", debunking several myths about its performance. While Europe hasn't experienced growth, its earnings per share grew by 14% over the first six months compared to the same period last year, marking the strongest pace in three years. Consensus now expects nearly 18% EPS growth for the full year. European companies' return on equity has improved notably in recent years due to rising margins and buybacks, aided by banks. The European economy is also slightly over 40% of STOXX Europe revenues come from outside Europe; the rest is global. However, the macro picture is improving, with new orders indicators surging across sectors like banks, pharmaceuticals, and industrial businesses. Despite being cheaper than the US, Europe is often viewed as unattractive due to its lack of growth. But the market is showing signs of interest from foreign investors. European equities are experiencing their best inflows in ten years, apart from 2021, driven mainly by foreign investors. The investment case for Europe, discussed in January 2025, has proven accurate, with the market performing well since then. However, retail investors, who make up nearly 50% of household wealth in the US, remain underrepresented in Europe. While in the US, equity allocations form nearly 50% of household wealth, in Europe, they remain low, around 20%. In the US, over 21% of households own stocks directly, with Germany and Italy at just 7%. This disparity extends to trading activity. In the US, retail investors account for around 20% of daily market turnover, whereas in the UK, they account for less than 5%. Government incentives, pension reform, and gambling legislation contribute to this disparity. Government incentives, such as stamp duty in the UK, act as disincentives for stock purchases. Pension reform has also steered investors away from stocks. Gambling legislation, on the other hand, allows some retail investing to satisfy risk and excitement, similar to gambling in the UK. Lastly, market access plays a crucial role. Commission-free stock trading lowered the cost of stock market entry in the US. However, in Europe, payment for order flow, which compensated brokers for lost commissions, was outlawed. This led to the temporary expiration of a Germany-specific carve-out, requiring brokers like Trade Republic to restructure their trade execution platforms. Policymakers are exploring various ideas to encourage more retail investors to the market, but the implementation remains inconsistent.",
  "summary": "Europe is outperforming – but Europeans aren’t participating",
  "key_points": [
    "European equities outperform global counterparts",
    "Banking sector outperforms US tech stocks since 2022",
    "Foreign investors show increased interest in Europe"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}