European equities drew $2.44 billion in the week to Aug. 12, the largest weekly inflow since the period ending Feb. 25, according to LSEG/Lipper data. The region has regained investor favor after its economy weathered the Iran war better than expected, while clearer monetary-policy guidance and limited exposure to AI-driven volatility have supported sentiment. The STOXX 600 is near record highs, and its companies are expected to report 24.1% second-quarter earnings growth, the strongest rate in nearly four years. European shares are up about 10% this year, compared with roughly 13% gains for both the S&P 500 and MSCI World. The euro has risen about 3% from mid-June lows to around $1.17, helped by stronger European data and a softer dollar. European equities trade at about 15 times forward earnings, a 26% discount to the S&P 500, although the gap has narrowed from 41% in November 2024. Banks, industrials, healthcare, energy, electrification and semiconductor-capital-equipment stocks are central to the region's appeal, while technology represents only 10% of the benchmark. Analysts say Europe could also benefit from concerns over U.S. fiscal sustainability, though inflation and uncertainty over the U.S. Federal Reserve remain risks.