European Stock Markets Are Living The Good Life

European Stock Markets Are Living The Good Life
Paul Allison, CFA

3 months ago2 mins

What’s going on here?

Europe’s stock markets showed the US that you can break records and still get a solid eight hours of sleep at night.

What does this mean?

Europe has a reputation for taking life slow, swapping overtime for siestas and energy drinks for cortados. Well, it seems a well-rested region is a force to be reckoned with: European stocks have trudged through months of heady inflation – which kicked economies in the shins and made it tough for folk to put focaccia on the table – and come out the other side in fine form. The DAX index, which tracks the 40 biggest German stocks, notched a new record high on Tuesday. That’s a big deal: Germany is usually Europe’s go-getter, so the country finding its balance again bodes well for the region as a whole. French stocks started closing in on their highest points too, while Italian indexes did their best since before the 2008 financial crisis. La dolce vita, indeed.

DAX
Source: Google Finance

Why should I care?

Zooming out: Europe could make the red, white, and blue green with envy.

Take those fired-up stocks out of the equation, and Europe still has plenty to brag about. The region’s governments have been more conservative with their spending lately, building up a smaller debt pile than their stateside equivalent. Plus, inflation’s falling faster in Europe than the US, paving the way for central banks to cut their economy-squashing interest rates and encourage savers to start spending instead.

Europe inflation
Source: Bloomberg

The bigger picture: Never doubt an underdog.

The US is the epitome of a work hard, play hard culture – and in many of the nation’s tech companies, you can forget about the play hard bit. That work paid off, though: Big Tech has done the US stock market a hell of a favor this year. So it’s even more impressive, then, that Europe’s markets have wrangled such success without the big-name artificial intelligence picks that have carried the US of A.

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