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1. EV growth outlooks have changed amid a challenged policy and tariff environment.

Global EV sales are expected to reach 21.9M units in 2025 (+25% Y/Y) driven by robust Chinese demand (+30% Y/Y).

In contrast, US EV sales are now expected to reach only 1.6M units in 2025 (+4% Y/Y), which marks the second consecutive year of growth deceleration due to anticipated policy phase-outs.

On a longer-term basis, global EV penetration is expected to hit 42% by 2030 (vs. 22% in 2024) with China and Europe likely to eclipse the average. US EV penetration is expected to hit only 27% by 2030 (vs. 10% in 2024).

2. The threat of tariffs has had little impact on the general mood.

Sentiment toward the European economy keeps improving, with the euro-area Sentix indicator just hitting its highest level since early 2022. This sentiment is backed by a gauge of positive economic surprises holding near the highs of the past year.

3. Potential for some sharp dislocations between profit expectations and stock performance.

Rallies this year in banks, stocks related to Germany’s fiscal spending and in defense have left these areas looking crowded and ripe for rotation.

“Negative revisions affected all the Stoxx 600 sectors, including defense stocks,” say Goldman Sachs strategists led by Peter Oppenheimer. “This has come alongside PMIs reporting below market consensus in the second quarter. Autos and basic resources saw the biggest negative revisions, while banks and domestically exposed fiscal spending beneficiaries have shown signs of resilience.”

4. S&P 500 at record highs and valuations are getting stretched.

Marija Veitmane, head of equity research at State Street Global Markets, said Wall Street shares started bouncing back in mid-April, partly because the "trade war became trade negotiations."

But by no means all investors are rushing back to Wall Street with the S&P 500 at record highs.

"The tariff announcement showed how fast sentiment can change and how risky these high (U.S.) valuations are," said Madeleine Ronner, senior equity portfolio manager at asset manager DWS, adding that European valuations are more reasonable. And while that gap had been appropriate because of slow corporate earnings growth, "Europe's (earnings per share) is starting to grow again, and the differential is getting smaller, which should be reflected in valuations," she said.

DWS sees U.S. and European GDP growth being roughly similar in 2025 and 2026, a further and sustainable boost to European companies' earnings.

5. Trump’s latest tariff threats hits Asia’s manufacturing giants.

The European Union is seeking to conclude a preliminary trade deal with the US this week that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline.

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