Many IFs

European equities are still trading at a record valuation discount relative to the U.S., and history shows that when valuation gaps stretch too far, they don’t stay that way forever—the rubber band eventually snaps back, the problem is to know when. Add to that a more aggressive ECB easing cycle, a potential resolution in the Russia-Ukraine conflict, and a political shift in Germany favouring growth, and the setup for European equities looks increasingly favourable. The old narrative of stagnation is fading—cyclical forces could be aligning, reforms could be taking shape, and with more pro-growth shifts in Europe, this rally could have much more room to run.

Many could’s and if’s, however, it makes it understandable that European equity indices had a good start into 2025.