Key Takeaways
- Large-cap stocks continued to outperform small-cap stocks in October.
- Utilities and technology were the best performing sectors with solid gains for Iberdrola and ASML.
- Defense industry and financial stocks suffered losses.
The Morningstar Europe Index ended October 2.5% higher in euros but underperformed the Morningstar Global Markets Index, which rose 3.9% in the same period.
As in August and September, large-cap stocks outperformed their smaller counterparts: the Morningstar Developed Europe Large Cap Index rose 2.7% compared with 1.2% for the Morningstar Developed Europe Small Cap Index. The two largest European companies by market capitalization posted strong gains last month: ASML Holding ASML gained 11.1% and LVMH MC 17.6%.
However, small-cap stocks have performed better than large caps since the April stock market low.
European Value Stocks Maintain Winning Streak
October also saw European value stocks outperform, with a gain of 3.2% versus a 2.2% rise for growth stocks.
This has continued a trend seen so far this year: growth stocks have risen 9.2% in 2025, compared with 22.6% for value stocks.
The stronger performance of the value style last month was largely due to utilities. The sector was the most profitable one in October with a 7.6% gain thanks to the performance of the largest companies like Iberdrola IBE (9.1%), Enel ENEL (8.8%), National Grid NG. (6.1%) and Engie ENGI (11.2%).
On the growth side, notable declines included defense industry companies such as UK-listed Rolls-Royce RR. (-2.6%), Germany’s Rheinmetall RHM (-14.3%) and Thales HO (-7.4%).
Technology and Energy Stocks Rise, Communication and Financial Stocks Fall
The second most profitable sector in October was technology. However, there was a significant disparity in performance between the two largest stocks in this sector: Netherlands’ stock ASML Holding ASML gained 11.1% in euros while Germany’s SAP SAP lost 1.5%.
The energy sector also performed well last month, rising 5.8% thanks to UK-listed Shell SHEL (6.9%) and TotalEnergies TTE (5.9%).
The worst-performing sector last month was communication services. The sector fell 1.6% in euros due to the 7% share price loss suffered by Deutsche Telekom DTE.
The financial sector also underperformed the market in October, with a gain of just 0.8%. Major banks such as Allianz ALV and UBS Group UBSG suffered share price losses in November. But that needs to be put into context of strong gains for financial services since October 2024, since when it has been the best performer among Morningstar sectors.
