Key Takeaways
- Most Morningstar country indexes gained in January, with France as the exception.
- ASML Holding led the stocks with a monthly gain of nearly 32%.
- Consumer cyclical stocks fell amid further declines by French luxury stocks LVMH and Hermès.
The Morningstar Europe Index delivered a positive return in January, ending the month with a gain of 3.4% in euros, but with significant differences in returns from one country to another. The Morningstar Netherlands Index, rose the most, up 13.9%, thanks to the sharp rise in ASML Holding ASML, which gained 31.9% in January.
Meanwhile, the Morningstar France Index was the only country index to end January in negative territory, falling 0.3% due to the poor performance of luxury companies LVMH MC and Hermès RMS, which fell 15.2% and 4.4%.
European Value Stocks Performed Better Than Growth Stocks
In January, value stocks outperformed growth stocks. The Morningstar Developed Europe Value Index returned 3.6%, beating the Morningstar Developed Europe Growth Index, which gained 3.0%.
That pattern of value leading and growth lagging largely mirrors what happened in the last 12 months in European stock markets, when value stocks achieved a return of 27.2% compared with 6.5% for growth stocks.
European Technology Stocks Up, Consumer Cyclical Stocks Down
At sector level, the strongest performers were technology, which rose 8.5%, utilities, 7.9% higher, and energy, up 7.4%, while consumer cyclical was the only sector with a negative return last month, declining 6.7%.
Which European Stocks Rose and Fell in January?
Although the technology sector was the most profitable in January, its two main components performed very differently. The largest European stock in the sector by market capitalization, ASML Holding rose by a significant 31.9%, but the second largest stock, SAP SAP, fell by 18.1%.
Within the utilities sector, the two main stocks, Iberdrola IBE and Enel ENEL, performed well last month, rising 5.3% and 7.5%, respectively.
In the energy sector, TotalEnergies TTE stood out with a 10.0% rise.
In contrast, the poor performance of the consumer cyclicals sector was caused by steep declines in the two largest French luxury stocks, LVMH and Hermès. The sector also suffered from an 8.3% decline in Netherlands stock Prosus PRX.
Another sector that underperformed the market last month was consumer staples, which rose just 0.3% due to the mixed performance of the two largest companies in the sector by market capitalization: France’s L’Oreal OR rose 5.6% while Nestlé NESN fell 5.3%.
