European Stock ETFs Post First Positive Month Since the Iran War Started

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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.

Europe’s stock market is firing on all cylinders and drawing money managers who say this rally will be more durable than just another short-term trade. https://t.co/krTiMFwpTa

— Bloomberg (@business) August 9, 2026

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.