There was no shortage of tremors during these first three months. The war in Iran, Greenland and the latest developments regarding customs duties are attributed to Donald Trump. Added to this are tensions related to private credit and the incessant rotations triggered by artificial intelligence disruptions.
Despite this environment, European markets showed resilience during the first two months of the year, with gains exceeding 3% in both January and February. At that time, Europe appeared to be a safe haven, packed with solid stocks, while markets seemed to be conducting a form of inquisition against potential losers of the burgeoning artificial intelligence tsunami.
By the end of February, the Stoxx 600 had posted its eighth consecutive month of gains, its longest streak since 2012-2013. The start of the year was therefore promising. Then the war in Iran spoiled the show, and March became the bloodiest month for European stock exchanges since 2022, bringing the 2026 YTD performance back to almost zero.
Giants' underperformance since YTD must also be highlighted. Amongst groups with a market capitalization of over €100bn alone, stock market disappointments are numerous in 2026: EssilorLuxottica has dropped 30%, SAP similarly, LVMH is down 27%, Hermes 20% and Prosus 25%. For the companies mentioned, this represents €267bn in market capitalization gone up in smoke.
On the winners' side, we applaud ASML, whose market capitalization is now approaching double that of its runner-up, LVMH, after a remarkable run since the September restart and a valuation that has returned to its 2021 highs.
Energy stocks are also big winners in the quarter, with increases of 52% for Eni and 43% for TotalEnergies, which is closing in on the podium of the largest European capitalizations. Less directly linked to the conflict in the Middle East, Siemens Energy can also be cited, with a valuation that has soared, thanks to its gas activities, driven by rising electricity demand.
These stocks played a major role. In the first quarter, European corporate earnings are expected to grow by 4%. However, excluding the energy sector, this growth would fall to 1.5%, Reuters says.
As my colleague Antoine pointed out at the beginning of the year, the last three years of European market gains occurred without earnings growth. A more sustainable rise will therefore likely require an improvement in corporate results.
The current context could nevertheless benefit the European market. Donald Trump's policy has revived the ambitions for strategic autonomy and competitiveness among European countries, now faced with their responsibilities. Furthermore, uncertainties around the rapid evolution of artificial intelligence also make European markets reassuring in many respects.
Finally, the outcome of the war in the Middle East will tell us more about what to expect for the rest of the year, particularly if the energy shock durably contaminates inflation.
