Would it surprise you that the U.K. stock market is hitting new all-time highs and several other European markets are either at new highs or approaching new all-time highs?
It seems like only a few months ago, European economies appeared to be wrestling with several serious issues, including the Ukraine war, supply chain disruptions, and red-hot inflation.
So what happened? More importantly, why are bulls running throughout Europe but not in the U.S.?
Many of the issues that put European stocks under pressure for much of 2022 appear to have eased. And at this point, investors are encouraged by Europe's economic resilience over the past year, and its outlook may be slightly brighter than the U.S. and China.1
Is it time to invest in Europe? Perhaps. Europe, like the U.S., is seeing inflation cool, but it's still historically high. So Europe's economy is not out of the woods yet.
Also, diversifying in Europe can make sense, depending on your goals and time horizon. But remember, diversification is an approach to help manage risk. It does not eliminate the risk of loss if the price of European stocks declines. Your risk profile would also have to be comfortable with starting or adding to a position in overseas markets.2
Let me know if you want more updates about potential opportunities in Europe. I can send along some information about the pros and cons of international investing.
1. CNN.com, February 1, 2023. “Europe grew faster than the US last year. Its markets are outperforming too.”