European equities finished the third quarter broadly flat as higher oil prices offset earlier gains, Barclays said. Germany and the Netherlands led within Europe while France lagged, and global equity funds attracted $372 billion for the quarter even as Europe kept recording outflows.
European equities were broadly flat in the third quarter as their earlier outperformance faded, Barclays said in a note dated Thursday. Oil prices rose through the quarter amid persistent U.S.-Iran tensions, a headwind that also stirred concern an energy shock could weaken growth.
Germany and the Netherlands lead, France lags
Within Europe, Germany and the Netherlands outperformed, while France lagged as renewed fiscal and political uncertainty weighed on investor sentiment. Global equities, by contrast, reached new highs and outperformed bonds despite higher interest rates and renewed tightening by major central banks.
Resilient economic growth and strong corporate earnings, supported by heavy investment in artificial intelligence, helped offset the impact of rising borrowing costs, according to Barclays. But the backdrop became less supportive in September, when both equities and bonds posted modest declines as stronger growth pushed investors to expect rates to stay higher for longer.
Developed markets outpace emerging markets
Developed-market equities outperformed emerging markets, with the MSCI World index gaining while the emerging-markets index fell. Strong U.S. gains drove developed-market performance, while South Korea weighed on emerging markets, though Taiwan and South Korea both posted gains in September.
Japan was little changed in local-currency terms but performed better in dollar terms as the yen strengthened, a move Barclays attributed partly to the Bank of Japan's earlier interest-rate increases.
Gold had a mixed quarter, initially rising on concerns about the Federal Reserve's credibility before weakening in September as the Fed raised rates and real yields increased.
Record inflows for 2026, but Europe keeps recording outflows
Energy stocks led sector performance, while financial stocks benefited from higher interest rates and stronger earnings momentum. Consumer and utility stocks lagged on higher oil prices and borrowing costs. Value stocks outperformed growth stocks globally, with the gap most evident in Europe and Britain, while U.S. growth stocks held up better as technology shares recovered late in the quarter.
Equity funds attracted $372 billion during the quarter, pushing year-to-date inflows above $900 billion and putting 2026 on course for a record year, Barclays said. Europe remained the main weak spot, recording outflows for both the quarter and the year despite a modest improvement in demand for Europe ex-UK funds, as British funds continued to see withdrawals.
Source: Investing.com
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