European equities have certainly sloughed off the effect of tariffs. In turn, the bullish momentum is propelling the Direxion Daily FTSE Europe Bull 3X ETF (EURL ) to greater heights.
According to the International Monetary Fund (IMF), a slowdown in 2024 made way for strength in 2025. GDP grew 0.4% in Q1 despite April’s tariff tantrum. Moreover, the effects of April’s tariffs have only had a limited impact on Europe’s economy. This was evident in data regarding the purchasing managers’ index (PMI). That speaks to the overall health of economies.
“The composite purchasing managers’ index (PMI) dipped slightly to 50.4 in April—from 50.9 a month ago in March—remaining above the neutral threshold of 50,” the IMF said, noting that the manufacturing PMI data also showed marginal improvement as seen in the chart below.
One of the success stories helping to power Europe’s economic trajectory is Poland. The country has been exhibiting strong economic growth in recent years with increased private consumption thanks to several factors. Those include the rise of real wages, government support for families, and inflationary pressures subsiding. This is helping to invigorate Europe as a whole.
’Following its geopolitical awakening, Europe recognizes the need for a new wave of economic integration, and with it, smart regulation and simplified laws to reignite the spirit of prosperity that has always defined the European way of life," the IMF said.
Cautious Optimism Warranted
In a time when tariffs, geopolitical tensions, and inflation are headlining the 24-hour financial news cycle, uncertainty can upend any rally. That said, like most investments in the current market environment, cautious optimism is warranted.
For Europe, research firm Deloitte is forecasting muted economic growth this year. As mentioned, tariffs have had limited impact on the EU. But trade deals can always take an unexpected turn. Given the fluidity of the tariff situation, traders should be ready to respond appropriately if news coming out of the Eurozone affects their positions.
“Looking ahead, the eurozone’s economic outlook remains subdued for 2025,” it noted in an Insights report. “Growth is expected to slightly soften in the coming quarters due to heightened uncertainty stemming from trade policy developments.”
“Probably more than the US tariffs themselves, it is this uncertainty that poses a significant challenge for the eurozone—particularly for business sentiment and investment,” it added. The chart below highlights the spike in political uncertainty.
If bullish momentum remains squarely in its favor, traders should look at EURL. The fund is up over 60% for the year, making use of the triple leverage exposure to the FTSE Developed Europe All Cap Index (ACDER).
Rather than trade individual European equities, EURL allows traders to diversify that exposure to the entire EU. The index is weighted according to market cap, offering exposure to large-, mid-, and small-cap companies in developed markets throughout Europe.
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