European equities drew a more constructive tone across the week, though the picture is far from unanimous.
Multiple research desks argued the region is under-owned and attractively valued, pointing to strong six-to-twelve-month performance prospects, improving earnings revisions, and a growth boost from German fiscal reform and rising defense spending. One asset manager framed Europe as "left for dead" and a diversification play away from concentrated US and AI exposure. Sector-level conviction clustered around European financials, luxury names like Richemont and LVMH (pitched as relatively insulated from AI disruption), industrials tied into the AI value chain, and UK utility SSE on the energy-transition theme. French equities saw fresh buying from previously underweight positions; Denmark was flagged for pharma-driven upside.
The contrarian thread was equally clear: some strategists stayed moderately underweight Europe ex-UK and the UK on stagflation risk and stretched earnings expectations, while institutional flows kept selling German equities despite the DAX's reform bounce. Middle East tensions briefly pressured indices mid-week.