European stock markets outperform US markets for the first time in years
The German economy is weak, but despite recent losses, the DAX is higher than at the beginning of the year. This is not a result of domestic strength: US President Trump is driving capital out of his country.
European stock markets outperformed US markets for the first time in many years in the first half of 2025 – thanks to US President Donald Trump. According to investment managers and economists, international investors have withdrawn billions from US markets and shifted them to Europe. The main reasons for capital flight from the United States are tariff threats and Trump's erratic policy changes. This means that international capital flows have reversed direction, at least for the time being. In previous years, immense sums flowed into the US.
The main European winners are the stock markets in Germany, Spain, and Italy, each with double-digit gains. The DAX has gained about 16 percent since the beginning of the year, despite recent losses. US stock markets, on the other hand, recorded only meager gains of less than two percent.
"Numerous indicators point to a significant movement of investor capital from the US to Europe, but also to other regions such as Japan," says Ludovic Subran, Chief Investment Officer at Munich-based Allianz, who is primarily responsible for investments. The Munich-based DAX-listed group is one of the international giants in the industry, with almost €2.5 trillion in invested capital.
For years, big money from all over the world had flowed into the US financial markets. "This has now changed," says Vincenzo Vedda, Global Chief Investment Officer at DWS, the asset manager of Deutsche Bank. "What was once a significant overweighting of the US by fund managers at the end of 2024 has now become a significant underweighting."
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