'US leadership returns': EU stocks lose ground to US yields

European stocks declined on Friday, April 24, amid uncertainty in the Middle East, losing their previous advantage over the U.S. stock market since the beginning of the year. Investors fear the impact of high oil prices on global economic growth, Bloomberg writes.

Brent crude oil prices again exceeded $107 per barrel, reaching the highest level since the U.S. announced a ceasefire in the Middle East, Bloomberg notes. Against this backdrop, the pan-European Stoxx 600 index was down 0.9% on April 24, cutting its gain since the beginning of 2026 to 2.6%, while the broad index of U.S. stocks S&P 500 rose 3.8% over the same period. The day before, the S&P 500 ended the session down 0.4%, yet it once again hit an all-time high of 7,147.78 points during the session.

However, despite the overall volatility, European markets have lagged global markets in recent weeks due to concerns that war with Iran will put prolonged pressure on inflation and consumer sentiment in Europe. At the same time, U.S. securities remain more resilient due to rising profits of technology companies, notes Bloomberg.

"One of the conclusions of this reporting season is that U.S. leadership [in the market] is returning thanks to its dominance in the technology sector and in particular in semiconductors," said David Kruk, head of trading at La Financière de l'Echiquier in Paris.

Despite geopolitical risks due to the war in Iran, the US market is supported by strong corporate reports, as well as renewed interest in the topic of artificial intelligence and a generally robust economy. According to Bloomberg, about 81% of companies in the S&P 500 have already beaten Wall Street's expectations for first-quarter earnings.

Prior to the conflict in the Middle East, Commonwealth Financial Network chief market strategist Chris Fasciano considered stocks in several European countries attractive relative to the U.S. market due to lower equity valuations, Reuters wrote in March. Before the war, the Stoxx 600 index was trading at about 15 times forward earnings for the next 12 months versus about 21 times valuation for the S&P 500, according to LSEG data.

However, in mid-April, strategists at JPMorgan and UBS noted that they now believe European equities have little upside potential this year. European companies in the consumer and goods-producing sectors, according to their estimates, will see their "overly optimistic profit forecasts" downgraded - amid a sharp rise in commodity prices. According to the consensus forecast of analysts surveyed by Bloomberg, the Stoxx 600 index will end 2026 only about 1% above current levels - at about 623 points.

This article was AI-translated and verified by a human editor