Key Takeaways
- Large-cap stocks outperformed small-cap stocks in both September and the third quarter.
- The best-performing European sector last month was technology, thanks to the sharp rise in ASML.
- Large consumer defensive stocks Nestlé, L’Oreal and Unilever bucked the positive market trend and suffered declines.
Large-Cap Stocks Outperform Small Caps
The Morningstar Europe Index ended September 1.41% higher in euros and 3.37% higher for the third quarter. But while the European market rose overall last month, large stocks outperformed their smaller counterparts, as shown in the gains of the Morningstar Developed Europe Large Cap Index versus the Morningstar Developed Europe Small Cap Index.
In September, the large-cap index rose 1.78% compared with 0.30% for the small cap index. This difference was even greater in the last quarter. During this period, the European large cap index rose 4.2% compared with 1% for the small-cap index. However, both indexes have a similar returns profile for 2025, as the following chart shows.
European Growth Stocks Stage Recovery in September
Last month also saw variations in returns between European growth companies and value companies. European growth stocks gained 2.5% compared with 0.8% for value stocks. However, overall European value stocks have been much more profitable than growth stocks so far in 2025, particularly in the last quarter. During the third quarter, growth stocks rose 2.21%, compared with 5.30% for value stocks.
The strong performance of the growth style last month was largely due to the sharp rise in ASML Holding ASML, which gained 30.1% in euros. This strong result was offset by declines in SAP SAP, Hermes International RMS and Novo Nordisk NOVO B.
Among large-cap value stocks, HSBC HSBA, with the largest stock market capitalization in this segment, rose 9.57% in euros. But the poor performance of companies such as Nestle NESN, Shell SHEL, TotalEnergies TTE and British American Tobacco BATS meant that, in the end, large value segment generated poor returns for investors.
Strong Rise in the European Technology Sector
Technology was the best-performing European sector in September, which rose 9.07% thanks to the sharp rise in ASML. The industrial sector also performed well, with a gain of 3.7% thanks to Airbus AIR, up 10.24%, and Schneider Electric SU, which rose 13.12%.
The worst-performing sector last month was consumer defensive, which fell 3.93% as the three largest companies by market capitalization recorded declines in their share prices: Nestlé fell 3.04%, L’Oreal OR lost 7.39% and Unilever ULVR fell 6.11%. The energy sector was the second-worst performing sector in September, falling by 2%. In addition to TotalEnergie’s decline, there have also been share price setbacks for BP BP. and Shell SHEL.
