Investing.com -- Investor concerns over Europe’s future amid geopolitical turbulence are overblown, according to BCA Research, which argues that fears of U.S. abandonment and Russian aggression are detached from reality.
“The market is not buying the fearmongering and neither should you,” BCA strategists led by Marko Papic said in a Tuesday note, reinforcing their long-held thesis that Europe will emerge stronger from the current geopolitical realignment.
Despite rhetoric suggesting that President Trump is pulling back support for Europe and Ukraine, BCA sees his actions as a calculated strategy aimed at securing domestic political backing.
“President Trump is not abandoning Europe," strategists continued. “He is playing hardball with Ukraine because he needs to get his recalcitrant supporters on board with continued US involvement.” BCA’s report frames this as part of a “two-level game,” in which Trump applies pressure before ultimately landing on an outcome that preserves the status quo.
The perceived threat from Russia is also overstated, BCA argues. While Moscow’s invasion of Ukraine has reshaped European security policy, the notion that Russia is poised to expand further into Europe is dismissed as “an alarming lack of military understanding or profound level of (ironically both American and Russian) propaganda.”
The firm points to Russia’s struggles in Ukraine, questioning how a country that has “failed to conquer all of Donetsk” after three years of war could pose a serious threat to NATO.
Instead of succumbing to fear, BCA sees Europe leveraging the situation to strengthen its economy and defense.
Thus, the firm’s strategists recommend overweighting European defense companies relative to their U.S. peers, citing the continent’s rising defense spending and industrial integration. Broader European markets are also expected to outperform U.S. equities over the decade.
“We have played this thesis since 2024 and continue to believe that it has legs,” strategists stressed.