European markets surge as US stocks struggle

US stocks have struggled despite early optimism following President Donald Trump’s election. 

The S&P 500 gained just over 4% in six months, while Germany’s Dax soared over 20%, France’s Cac 40 rose 10% and the UK’s FTSE 100 climbed 5%. Europe’s Stoxx 600 index jumped 8.5%, per the Financial Times. The Hang Seng Index of Hong Kong rose 23% this year.

Investors worry that increasing prices, tariffs and layoffs may hurt US economic growth.

Meanwhile, European countries are working on increasing their defense spending. Leaders of 27 countries approved a scheme that would help them boost military budgets. The move came after the Trump administration told the bloc to look after its own security.

Leaders of the bloc plan to increase their defense budgets by $162 billion (150 billion euros). The spending push has fueled growth in defense and infrastructure stocks. Germany’s Rheinmetall surged 130% in six months, and Siemens Energy posted similar gains.

European defense stocks also surged after an Oval Office meeting between President Trump and Ukrainian President Volodymyr Zelensky went off the rails.

Investors shift focus
Tesla, which nearly doubled in value after Donald Trump’s win, has now lost most of those gains. 

Many fund managers believe Trump’s “Make America Great Again” agenda has unintentionally fueled a “Make Europe Great Again” trend, which has pushed investors to shift from US tech stocks to European and Chinese markets.

Inflows into German equities recently hit a three-year high, signaling growing confidence in Europe’s economic outlook.

On Thursday, the euro touched its strongest level against the dollar since early November. The hope of European growth has also affected long-term Treasuries; the 10-year yield has gone down from 4.8% in early January to below 4.3%.