The most notable historical feature of the European stock market in the past round is the valuation repair that has long lagged behind U.S. stocks, but is now catching up due to profit improvements and changes in interest rate expectations. The Stoxx 600 reaching new highs indicates that the market is no longer solely focused on macro discounts but is beginning to buy back the profit elasticity of European companies.

In terms of capital flow, money first flows into U.S. AI earnings reports, then transmits to European chip equipment, materials, and industrial chains. Companies like ASML, Infineon, Soitec, and BE Semiconductor are actually benefiting from the spillover of global AI capital expenditures, rather than a separate explosion of local demand in Europe.

This is more akin to a phase where "global tech prosperity spreads to Europe," rather than a simple rebound in European stock valuations. Historically, similar windows often appear after the confirmation of U.S. tech profits, at which point funds will seek to compensate for the lagging beneficiaries in the European supply chain.

Essentially, this is a restructuring of the industrial chain. AI capital expenditures are re-linking semiconductor equipment, advanced materials, industrial automation, and power demand, thereby providing the European market with a new profit anchor, rather than relying solely on banks and value stocks for support.

ABAB News · Cognitive Laws

The end of valuation repair often leads to profit confirmation.
A true bull market not only raises leaders but also boosts the supply chain.
Macro determines discounts, while industry determines new highs.