July 2025 Index Market Overview: US Tech Soars, Europe Holds Steady

In July 2025, major equity indexes continue their upward trend, with US markets reaching new highs, with European markets also seeing significant climbs. This surge in optimism is largely attributed to robust corporate earnings and excitement surrounding artificial intelligence (AI).

US Equities: All-Time Highs and AI Dominance

US equity indexes, including the S&P500 and Nasdaq100, have posted a series of all-time highs in late June and early July. The S&P500 peaked at 6,2896.6 on July 3rd, and the Nasdaq100 index reached 22,915.3 on July 9th. This performance has pushed valuations close to post-millennium extremes.

Key drivers of this growth include semiconductor manufacturers, semiconductor equipment makers, and software application companies. Notably, Nvidia has become the world's first USD 4 trillion company, surpassing Microsoft. Investor sentiment is highly optimistic, with low asset market volatility and a low put-call ratio, indicating little demand for downside protection.

Despite renewed tariff threats from President Trump, financial markets have largely remained calm, focusing on strong corporate earnings. However, the elevated valuations suggest that investors will be closely watching upcoming earnings reports for confirmation of this optimism.

European Markets: DAX40 Climbs, FTSE100 Supported by Monetary Easing

European bourses also experienced gains, with the DAX40 index reaching an all-time high of 24,634.7 on July 9th. The DAX40's rally in July was 5.0% month-over-month and an impressive 35.0% year-over-year. This growth has been led by large capitalisation stocks, particularly in industrials and banking sectors. However, the DAX40 is showing signs of concentration risk, with the top five companies making up a significant portion of the index. Elevated PE ratios for companies like Rheinmetall, SAP, and Airbus indicate that an acceleration in corporate earnings is needed to sustain these valuations.

The FTSE100 index saw a more modest gain of 0.4% month-over-month but remains up 9.9% year-over-year. The Bank of England's recent actions, including a 25bp rate cut in May and expectations of further cuts, are anticipated to support corporate earnings and the FTSE100's valuation. The index's valuation does not appear stretched.

Key Takeaways for Investors

• US Market Exuberance: The US equity market is experiencing significant optimism, driven by strong corporate earnings and the AI boom. However, valuations are stretched, making upcoming earnings reports crucial.
• DAX40 Concentration: While the DAX40 has performed strongly, its concentration among a few large companies and their elevated PE ratios suggest a need for accelerated earnings growth.
• FTSE100 and Monetary Policy: The FTSE100 is expected to benefit from easing monetary conditions in the UK, which should support domestically oriented stocks.
• Upcoming Events: Investors should pay close attention to upcoming earnings reports from major US tech companies like Tesla, Microsoft, Apple, and Meta Platforms, as well as economic data releases and central bank meetings in the US and UK.

In summary, July 2025 has been a strong month for global equity markets, particularly in the US, driven by robust corporate earnings and the ongoing excitement around artificial intelligence. While US indexes are reaching new highs and valuations are stretched, European markets like the FTSE100 are finding support from anticipated monetary easing. Investors should remain attentive to upcoming earnings reports and economic indicators to gauge the sustainability of these trends.

For a more in-depth analysis, download the full Index Monthly report.