European currencies rose on Monday after leaders in the region rushed to craft a plan to support Ukraine, boosting expectations for growth and higher defence spending. The US turnaround is undoubtedly a historic opportunity for Europe to tackle the subject of an autonomous European defence with potentially very positive economic ramifications. The Stoxx Europe aerospace and defence index rose +8%, posting its best session in five years. Stocks reacted accordingly, with most bourses across the region rallying to new all-time highs: some of the US tech sector selling was likely to switch into European stocks as they take over the momentum mantle.
- We expect European bourses to outperform their US peers in 2025, but they’ve already rallied hard; hence, a pullback wouldn’t surprise us.
MM is cautiously bullish towards European stocks
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