I rarely start the new year with resolutions, but I always start by looking at the things that have changed while we were busy analyzing quarters and reading cycles. This time, it was a simple moment in the supermarket that got me thinking: a shelf full of products that were hardly available a year ago, plus consumers who are comparing prices again instead of reflexively grabbing the first thing they see. It was just an everyday scene, but it reminded me how subtle the signals that often accompany economic turning points can be. It is not the big indicators that herald them, but small shifts in behavior – where uncertainty is slowly giving way to normality. It is precisely such observations that highlight how quietly and unspectacularly the ground is being prepared for markets to regain their footing.

Such a transition is also shaping the European economy. 2025 was a year that was difficult to fit into a classic pattern. Europe started off solidly, but then lost momentum noticeably compared to the US. However, the conditions for 2026 are different. There are many indications that the phase of the strongest dollar depreciation is over and that the greatest pressure on European exports is easing. At the same time, the uncertainties in international trade are beginning to lose their terror, and the prospect of predictable conditions is acting as a liberating blow for those industries that have been holding back over the past twelve months.

Substantial Turning Point

The fact that Europe is also the only major market that has not recently gained any noticeable valuation multiples creates additional room for recovery. Fiscal stimulus measures – above all from Germany – could trigger a turnaround in corporate earnings and thus lay the foundation for more attractive valuations. Even in the consumer goods sector, which suffered particularly badly in 2025, there are signs of stabilization. People are shopping more consciously again, but also with greater confidence. For many companies, this is a decisive turning point – not spectacular, but substantial.

What does this mean for investors who want to assess Europe in 2026? It is not an environment in which a simple style bet is sufficient. The changed conditions are having an impact above all in those areas where planning security and investment programs are having a real impact. Industry in particular is therefore once again taking center stage. Europe is at the beginning of a phase in which government spending – from infrastructure and energy to the modernization of the production landscape – is translating into concrete projects. Companies with robust balance sheets and high pricing power are likely to be among the first to reflect this trend in their figures.

Banking Sector no Longer Driver of Returns

At the same time, opportunities are opening up for export-oriented companies that have suffered particularly from the currency situation and trade debates. A more stable dollar, the retreat of tariff dynamics, and an encouraging consumption trend are creating an environment in which thin expectations can rise again. For major European brands, especially in the consumer and luxury segments, 2026 could therefore be a year of normalization—a gradual transition from cautious restraint to regained confidence.

The banking sector remains stable, but is no longer the driver of returns it was in previous years. Strong valuation increases have left their mark, and 2026 is likely to be characterized more by earnings stability than expansion. Nevertheless, the solid capital base of many institutions suggests that they can play a reliable role, especially in periods of increased volatility. 

Europe as a Counterweight to The US Tech Sector

In 2026, Europe will offer a mix of stability and new approaches. For global portfolios, which are often heavily weighted toward the US and the technology sector in particular, the continent acts as a counterweight – defensive, but with structural catch-up potential. The European recovery is unlikely to be spectacular, but rather a quiet yet steady return to economic normality. For investors who are willing to look beyond the headlines, this could be where the real opportunity lies: a market that does not have to shine to be attractive, as long as its direction is right and its fundamentals are gradually returning to balance.

Francesco Sedati, Head of Equities at Eurizon.