Nuveen says Europe a reminder resilience is uneven

Binaya Dahal

Journalist

4 June 2026

Nuveen’s Laura Cooper says Europe’s recent market performance is a reminder that resilience across global markets is uneven, with earnings strength increasingly concentrated in the United States.

The remark comes as continent’s earnings outlook deteriorates, weighed down by energy volatility linked to the Iran war, and persistent margin pressure across industrials, autos and consumer sectors, raising doubts over the durability of the region’s recovery narrative.

Cooper, managing director, head of macro credit and global investment strategist at the $1.4 trillion asset manager, said the dispersion in performance highlights how much of the apparent global resilience story is still being driven by US growth and AI-linked investment.

“Nearly half of European companies have experienced earnings downgrades this year, while margins remain under pressure across industrials, autos, and consumer sectors,” she said.

“Energy has accounted for roughly one-third of European earnings growth. Strip it out, and the broader earnings picture looks considerably weaker.”

Investors had turned more constructive on the region earlier in the year, supported by fiscal expansion, increased defence spending and expectations of more supportive policy from the European Central Bank. But Cooper said the earnings data do not yet justify sustained optimism.

The region’s vulnerability is further exposed by its status as a net energy importer, leaving it more sensitive to supply shocks and price spikes linked to geopolitical escalation. Inflation has already moved closer to the ECB’s more adverse scenarios.

At the same time, European capital flows continue to reinforce US market dominance, particularly in technology equities. Over the past decade, European investors have significantly increased exposure to US stocks, deepening reliance on US mega-cap growth for returns.

“That feedback loop matters,” Cooper said. “If US productivity gains or future AI-driven profitability disappoint, the spillover effects would not remain confined to the US equity market but would tighten financial conditions globally, including in Europe.”

Copper added the picture remains similarly uneven in the global scale. While US growth has remained resilient, supported by strong labour market conditions and investment tied to artificial intelligence, breadth across sectors and regions has remained limited.

“Markets have absorbed an extraordinary amount of bad news this year – geopolitical escalation, an energy shock, rising fiscal concerns and central banks signaling rate hikes – because investors are making a specific bet: that U.S. earnings, U.S. growth, and the AI investment cycle are powerful enough to offset almost everything else,” she said.

Furthermore, bond markets continue to reflect a more cautious stance, with long-end yields signalling concern over persistent fiscal deficits, rising sovereign issuance and the long-term cost of capital.

“That disagreement ultimately comes down to a single issue: can productivity and earnings growth continue to outrun debt, deficits and a structurally higher cost of capital? For now, equities are winning that argument,” Cooper said. “The next few quarters may provide the answer.”