retaken its prior all-time high<\/a>, both were up 5%.<\/p>\nMeanwhile, the DAX stock market index in Germany is up 19% so far this year, down from 20% in June. Other gauges have gained ground, but not as much as U.S. stocks have. The FTSE 100 in the U.K. is up 13% versus 8% in June. And the MSCI Europe stock index has jumped 25% for the year, up from 21%.<\/p>\n
(China is a different story. Hong Kong\u2019s Hang Seng Index has soared 32% this year, up from its 21% year-to-date gain in June.)<\/p>\n
Sentiment has shifted dramatically about Europe. Investors are getting more nervous about the deficit outlook in the U.K. and France, while economic growth remains subdued. And hopes for a burst of government spending and deregulation have failed to materialize so far.<\/p>\n
\u201cOutside Germany, investors appear frustrated with the lack of progress: there are no signs of the German government turning on the spending machine,\u201d analysts at Deutsche Bank said in a note on Wednesday. \u201cThis has fuelled concerns that the government is dragging its feet, and perhaps wavering in its commitment, on implementing the promised defence and infrastructure spending spree.\u201d<\/p>\n
While they still see a \u201csugar rush\u201d coming eventually, they are less upbeat about the long-term growth implications. <\/p>\n
By contrast, U.S. markets have been turbocharged by continued bullishness on the AI revolution, moderation in Trump\u2019s trade war, robust corporate earnings, continued GDP growth, resilience among consumers, tax cuts, and the Federal Reserve\u2019s return to easing.<\/p>\n
U.S. stocks stand to get a further lift from the central bank, and potentially close the gap even more with Europe.<\/p>\n
On Wednesday, the Fed lowered rates for the first time since December, though many on Wall Street read a hawkish message in Chairman Jerome Powell\u2019s press conference.<\/p>\n
In particular, he described the move as a \u201crisk-management cut,\u201d suggesting it wasn\u2019t the start of an aggressive easing cycle. He also warned that there are no risk-free options and that it\u2019s not obvious what will happen going forward. <\/p>\n
But economists at Citi Research disagreed with the market\u2019s interpretation that Powell was hawkish and instead read a more dovish message. <\/p>\n
\u201cPowell later clarified that the effectiveness of today\u2019s cut was coming not from the effects of one 25bp rate cut, but from the market pricing-in further cuts \u2014 suggesting that in their base case Fed officials will follow markets and the dot plot and cut 75bp this year,\u201d Citi said in a note on Wednesday.<\/p>\n
Meanwhile, equity strategists at JPMorgan pointed out on Thursday that the S&P 500 has gained an average of 26.5% in the second year of an easing cycle, assuming no recession, compared to a 13.7% gain in the first year.\u00a0<\/p>\n
The Fed started its rate cuts last September, and the market has already outperformed its typical first-year gain by climbing 17.6% in that time, JPMorgan added. <\/p>\n
\u201cRate cuts have historically provided meaningful support for earnings with a lift in consumer spending, investment spending (capex and R&D), M&A and buybacks,\u201d strategists said.\n<\/p>\n
Fortune Global Forum<\/strong> returns Oct. 26\u201327, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"After President Donald Trump shocked global markets with his aggressive tariffs earlier this year, investors turned away from…\n","protected":false},"author":2,"featured_media":441892,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[51,299,83834,2441,976,14413,16,15],"class_list":{"0":"post-441891","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-europe","10":"tag-fed-interest-rates","11":"tag-markets","12":"tag-nasdaq","13":"tag-sp-500","14":"tag-uk","15":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115244658134084257","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/441891","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=441891"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/441891\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/441892"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=441891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=441891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=441891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}