DAX, FTSE and CAC: European Indices Quietly Outperform
European benchmarks have closed the gap with US peers as a weaker euro, hawkish ECB, and improving earnings revisions support the rotation.
European equity indices have quietly become one of the best-performing developed market trades of the quarter. The DAX is up over 9% year-to-date, the FTSE 100 has cleared the 8,400 mark, and the CAC 40 is back within touching distance of its February highs.
What is driving the rotation
- Earnings revisions for European large-caps have turned positive for the first time since 2024.
- A hawkish ECB is supporting bank net interest margins, with the SX7P banks index hitting a multi-year high.
- Defence and infrastructure spending continues to drive industrial revenue lines, particularly in Germany.
Index-level setups
- DAX 40 — clean uptrend, support at 18,200, next resistance 19,000.
- FTSE 100 — energy-heavy and dividend-rich, supported by gold and copper names.
- CAC 40 — luxury exposure is the swing factor; watch LVMH and Hermès earnings revisions.
For US-based investors, the FX overlay matters. A hedged European equity position has materially outperformed an unhedged one this year, and that dynamic is unlikely to reverse until the ECB blinks.