Money managers are allocating to European assets as resilient economic data and attractive valuations drive a broad rally in stocks and the euro.
DAX rallies as money managers increase bets on European resilience, driven by improving economic data and attractive valuations. The index benefits from inflows into European equities, with the German benchmark often acting as a proxy for the region.
Based on inflows and momentum, analysts see near-term resistance at 16,500, with a break above opening the path to 17,000 if economic data continues to beat.
The DAX is heavily weighted toward exporters and may be more sensitive to global trade dynamics. Broader indices like the Stoxx 600 offer diversified exposure.
EUR/USD strengthens as capital flows into European assets, buoyed by the resilience theme and a weaker dollar outlook. The currency pair benefits from the bullish euro sentiment and diverging monetary policy expectations between the ECB and Fed.
A break above 1.0950 could target 1.1000, but a reversal below 1.0850 would negate the bullish setup. Inflows and rate differentials are key drivers.
If the ECB maintains a hawkish stance while the Fed leans dovish, the euro could extend gains. However, any sign of ECB caution on growth could cap upside.
European equities and the euro advanced as money managers shifted allocations, betting on the region's economic resilience. The Stoxx 600 and DAX posted gains, while EUR/USD strengthened above 1.0900. Improving economic data and attractive valuations drove inflows, with analysts citing upside surprises in manufacturing and services PMIs.
Money managers point to improving economic data, attractive valuations compared to the U.S., and a weaker dollar. Recent PMI and GDP surprises have boosted confidence in the region's outlook.
They see Europe as under-owned with catch-up potential, supported by cheaper equity multiples and a cyclical recovery that could sustain corporate earnings.