European stock exchange-traded funds (ETFs) recorded a month of positive net flows in July, their first since the US-Iran conflict began in late February, according to Bloomberg data.

The return of capital signals renewed investor appetite for the region. A strong earnings season and easing oil prices have restored Europe’s appeal as a hedge against volatile technology stocks.

Investor Money Returns to Europe

BlackRock highlighted that its European equities products attracted $4.4 billion in July. The asset manager described the flows as evidence of anti-momentum allocations away from volatile chipmaker stocks.

A July sell-off in global semiconductor stocks had pushed investors toward regions less tied to technology and artificial intelligence stocks. Europe emerged as a favored destination.

Strong corporate results reinforced the shift. Companies in the Stoxx Europe 600 are on track for 22% year-on-year earnings growth in the second quarter, the strongest since 2022.

Banks led the performance. BNP Paribas saw quarterly profits surge by a third, while UBS profits jumped 17% to a record, both driven by trading revenues.

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Banks Turn Bullish on the Rally

Meanwhile, UBS raised its year-end target for the Stoxx 600 to 690 points from 630. Against Friday’s close, that implies roughly 5% further upside.

Goldman Sachs echoed the confidence in its August picks. The bank projects 168% upside for UK clean energy developer Ceres Power and 102% for German defense contractor Rheinmetall over 12 months.

The Stoxx 600 has gained 10.7% in 2026 and touched a record 663.4 points this month. Germany’s Dax, the FTSE 100, France’s Cac 40, and Spain’s Ibex also reached highs.

Not every strategist agrees. Societe Generale expects the Stoxx 600 to fall to 600 points, while TFS forecasts a 9% decline to 585.

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Source: BeInCrypto