Forget Maga and US exceptionalism; 2025 is all about Mega – Make Europe Great Again.
Nine of 2025’s 10 best-performing stocks are European, with defence stocks dominating the list. German stocks have been especially buoyant since incoming chancellor Friedrich Merz announced his plan to borrow €900 billion for belated defence and infrastructure spending.
Germany’s mid-cap MDAX index enjoyed its biggest one-day surge since March 2020. German stocks outpaced their US counterparts by 8.69 percentage points over a three-day period.
Over the last three decades, says Bespoke Investment, only two periods saw wider performance spreads.
In January, Stocktake noted that Irish economist Michael O’Sullivan was forecasting a “very meaningful rotation” from “stratospheric” US stocks to Europe, with Merz’s expected election a potential catalyst. With Europe now leading global markets, that rotation may be unfolding faster than anyone expected.
