European Markets Bounce Back as Iran War Fears Fade
European markets have bounced back stronger than anticipated following the Iran war, thanks to a clearer monetary policy outlook and limited exposure to AI-driven volatility.
The STOXX 600 index is near record highs, with company earnings exceeding expectations and the euro at a three-month peak. European equities saw a $2.44 billion inflow in the week to August 12, the largest since the week ending February 25.
According to Morgan Stanley's chief European equity strategist Marina Zavolock, 'inflation is good for equities' as long as it doesn't cause a recession. European shares have risen about 10% so far this year, while the S&P 500 and MSCI's World stock index are up around 13% each.
Support has come from a better-than-expected macro backdrop and sector-specific factors, such as higher energy prices boosting oil and gas companies. The STOXX 600 earnings' growth is expected to post 24.1% in the second quarter, their strongest growth rate in nearly four years.