European stocks have been the surprise success story of 2025, and banks the surprise within Europe. The iShares MSCI Europe Financials exchange-traded fund has soared by a third this year, boosted by a 9% jump in the euro versus the dollar. U.S. peers have advanced 5%.

Further gains could be tougher. “The catch-up has happened,” says Emmanuel Cau, head of European equity strategy at Barclays Investment Bank. “The market may need some time to adjust now.”