Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

As global markets face a year of political tension and unpredictable policies, Europe is standing out in a surprising way. 

Meanwhile, the U.S. is caught in legal disputes over President Trump’s trade decisions – unsettling both businesses and investors. 

This article explains: 

1. Why European markets are outperforming 

2. How legal uncertainty in the U.S. is influencing global investment decisions

1. Europe’s Stock Market Surge 

European stock markets are having a standout year. 

As of June 2025, eight of the ten best-performing stock markets in the world are in Europe. Germany’s DAX Index is up over 30% in dollar terms. Countries like Poland, Slovenia, and Greece are also rising fast – helped by EU infrastructure funding, recovering exports, and political stability. Poland and Slovenia, for example, have seen growth in tech investment and public spending. 

The Stoxx 600 Index, which tracks major European companies, is outperforming the U.S. S&P 500 by a record 18 percentage points. What’s behind this surge? 

● Germany’s public investment in infrastructure and defense [1].

● Stronger-than-expected company profits, with a 5.3% rise in the first quarter [1].

● A stronger euro, which is attracting global capital.

According to RBC Wealth Management, interest in European equities has jumped after years of underperformance [1]. 

2. Trouble in the U.S.: Legal Confusion and Trade Fears

While Europe appears stable, the U.S. is experiencing legal and policy uncertainty. In a dramatic legal sequence, a federal court first blocked – then reinstated – tariffs imposed by President Trump under emergency powers [2]. 

This back-and-forth is creating confusion. Businesses that depend on stable trade policy, particularly in manufacturing, technology, and automotive sectors, are left uncertain. 

EU officials argue that this instability is pushing more capital toward Europe. They describe the EU as a “rules-based” economy, in contrast to the U.S.’s court-driven policy environment [2]. 

As a result, more investors are shifting funds into European markets. 

What Is IEEPA? 

The International Emergency Economic Powers Act (IEEPA) is a U.S. law that allows the president to impose trade restrictions during national emergencies. President Trump relied on IEEPA to introduce sweeping tariffs in 2024 and 2025. 

Now, U.S. courts are reviewing whether those actions were lawful. Unlike the EU’s collaborative trade framework, IEEPA grants one person – the president – broad authority, which can create market unpredictability [2]. 

3. France v Germany 

Not all parts of Europe are growing equally. Germany has led the rally, backed by new government spending and strength in defense and industrial sectors [1]. 

France, however, is recovering more gradually. Consumer spending rose just 0.3% in April 2025 – well below expectations [3]. Even so, France has strengths. For instance, the French Open tennis tournament generated over €340 million in 2024 through ticket sales, sponsorships, and media rights [4]. 

This shows how cultural events and global branding — especially in tourism and luxury — support parts of the French economy. 

4. What Muslim Investors Should Keep in Mind 

Europe may seem more stable, but it’s not without risks. If you’re exploring halal investing, consider using Musaffa’s halal stock screener to check whether European companies meet Shariah compliance standards. 

Risks to Consider:

● Currency swings, especially if U.S. interest rates or trade policies change quickly.

● Exposure to global trade tensions, since many European firms export globally 

Still, with the U.S. facing policy uncertainty, Europe’s slower but steadier regulatory approach is appealing to long-term, ethically focused investors. 

Final Thoughts 

Europe hasn’t always been a first choice for halal investors. But in 2025, the story is changing. Markets are rising, U.S. trade policies are under legal pressure, and sectors like infrastructure, luxury, and green energy are gaining traction. 

If you’re looking to diversify in line with your values, now might be the time to explore what Europe has to offer. Tools like Musaffa’s halal stock screener can help you find compliant opportunities. 

References 

1. Bloomberg, “Europe Stocks Stage World-Beating Rally as Trade War Backfires”, June 1, 2025.
2. Reuters, “EU gains leverage in trade talks as US court casts doubt on tariffs”, May 30, 2025.
3. Bloomberg, “French Consumer Spending Rises Less Than Expected in April”, May 28, 2025. 
4. Bloomberg, “Roland-Garros Is Serving Up Some Economic Wins for France”, May 30, 2025. 
5. Musaffa Halal Stock Screening Tool: https://musaffa.com/

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