Can European stock markets continue their rally?

European stock markets have outperformed US counterparts in 2025, with US stocks facing stretched valuations, particularly among big tech companies. The European rally is driven by cheap valuations, improved earnings, and potential increased defense spending. Uncertainty surrounding US tariffs and a possible ‘Trumpcession’ have also led to European investors turning away from US assets. While the rally may continue, factors such as profit margin expansion and trade relations could impact its longevity. To access European markets, investors can consider ETFs like iShares Core MSCI Europe UCITS ETF, Amundi Stoxx Europe 50 UCITS ETF, or the European Smaller Companies Trust.

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