European stocks finished the second quarter with strong momentum, helped by a sharp rebound in technology shares and improving confidence across financial and industrial sectors. The move pushed major regional markets back towards record levels and showed that Europe remains part of the global equity rally, even with less direct exposure to artificial intelligence than the US market.
The Morningstar Europe Index rose more than 11% over the quarter, its strongest three-month performance since late 2020. In dollar terms, the index gained just over 10%. The recovery followed a weaker period earlier in the year, when geopolitical concerns and market volatility had reduced appetite for risk. By the end of the quarter, attention had shifted back to corporate earnings, sector strength and the companies most exposed to long-term technology spending.
Technology was the main driver. European tech shares rose by almost 40% during the quarter as demand linked to artificial intelligence continued to support semiconductor and equipment stocks. Infineon Technologies more than doubled, while ASML gained 45%. Both companies benefited from renewed interest in chip supply chains and the infrastructure needed to support AI growth. Nokia and Siemens also advanced strongly, showing that the theme extended beyond chipmakers alone.
Financial stocks rose almost 20%, while industrials gained around 14%. This gave the market a wider base and reduced the impression that the quarter was driven by a single sector. Banks benefited from better sentiment, while industrial companies were supported by expectations for steady demand and improving confidence in the economic outlook.
Country performance also reflected sector exposure. The Netherlands led the region, helped by ASML’s weight in the market. Italy and Spain both gained more than 15%, supported by strong moves in cyclical and financial stocks. France and Germany also moved higher, although gains were more modest as weakness in some consumer, software and defence names limited progress.
JPMorgan European Discovery Trust plc is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
