European Equities Rebound as Global Market Volatility Grips

A Citi report finds that European equities are the only major global market where risk appetite has rebounded meaningfully, supported by sustained capital inflows and better-than-expected corporate earnings.

The Euro Stoxx 600 has gained nearly 5% since early June, while the S&P 500 has been roughly flat over the same period. In fixed income, the European Central Bank's policy path is seen as more predictable, prompting institutions like UBS Asset Management to add German bunds.

Citi strategist David Chew noted that European markets have a lower reliance on AI-related premiums, giving them stronger defensive qualities amid tech-stock volatility. He believes current sentiment has not yet reached overheated 'euphoria' levels, suggesting there is still room for the rally to extend.