Money Managers Say Rally in Europe’s Small Stocks Has Just Begun

As 2025 kicked off, Michael Oliveros was finding it hard to sell European equities with a smaller market capitalization.

Investors were piling into larger stocks, in a wager that President Donald Trump’s tariff threats wouldn’t materialize. Economic growth was proving resilient and optimism around corporate earnings had propelled the large-cap Stoxx Europe 600 Index to record highs.

Some eight months later and Oliveros, head of global small caps at $2 billion asset manager Invesco Ltd., has a far more receptive audience. Sentiment has been flipped on its head as Trump’s erratic trade policies and sweeping tariffs upend the global ...