European Stocks Are Losing an Edge That Took Them Years to Gain

It took years to lure investors back to European stocks. Making them stay is starting to be a challenge.

The Iran war has hit euro-area stocks harder than their US peers, with the Euro Stoxx 50 index of blue chips down more than 7% since the start of hostilities, while the S&P 500 Index has fallen less than 4%. The European market is still beating the US this year, but the tide is turning. Meanwhile, a valuation discount Europe enjoyed is vanishing fast, with US stocks experiencing a sharp de-rating of their own that’s closing the gap.