The impact of market volatility caused by the Tariff saga and geopolitical shifts in the US seen throughout the first half of this year will help drive long-term investment in the European equities markets, a report by Bloomberg Intelligence has revealed.
According to the 2025 European Institutional Equity Trading Study, all traders from the medium-sized funds surveyed predicted that these periods of market turbulence would help support the growth of European equities.
Within the survey, 73% of small-fund and 71% of large fund traders agreed with this trend, although 14% and 7% of small and large funds indicated that this instead reveals a decline in the attractiveness of US equities, rather than of support for European stocks.
Similarly, 91% of the heads of trading and senior traders surveyed stated that during periods of market stress this year, they did not experience challenges in accessing the liquidity required.
Specifically, only 9% of large funds, and 18% of medium funds struggled to obtain the liquidity they needed, while none of the small funds encountered liquidity accessibility issues.
The findings mark a sharp contrast to previous periods of turbulence, such as the Covid-19 pandemic, where liquidity experienced a notable decline.
Read more – Market volatility driving derivatives growth
Conversely, the report now pointed towards different issues faced by traders during volatile periods, including challenges accessing the right liquidity sources, and aligning trades with each desk’s investment philosophy.
European liquidity still a key concern
Despite the liquidity benefits brought by market turbulence this year, finding European equity liquidity remains a significant hurdle, with the study highlighting this as the second-largest challenge for buy-side traders, alongside market fragmentation.
Of those surveyed, 43% of medium asset managers underlined these aspects as the most difficult part of their work, while liquidity was ranked joint first by 22% of small funds, partnered with a lack of a consolidated tape and T+1 settlement in Europe.
Similarly, 71% of buy-side institutions stated that accessible liquidity is a key challenge for European markets. A lack of innovation and excessive regulation were also prominent issues which surfaced during the study.
When assessing how to overcome liquidity problems, traders appeared to highlight a growth in retail participation as a means to enhancing European equity liquidity, with 69% of small funds stating they would like to trade with retail flow, followed by 64% of mid-sized funds, and 58% large funds.
Currently, only under a quarter (22%) of the funds surveyed trade with retail flow, but there appears to be an appetite for increased exposure.
Importantly, however, the study revealed that the vast majority (76%) of European institutional investors are opposed to the introduction of 24/5 or 24/7 trading across the region, despite an uptake in interest around the topic in recent months, with many US exchanges applying for extended trading hours.
The study stated that opinions on this matter were strong, with one trader who commented: “We wanted shorter hours and now they’re talking about trading 24/7 which is ridiculous.”
Bloomberg Intelligence interviewed 103 head and senior buy-side traders from traditional asset managers and hedge funds to collate this report, from firms managing more than £25 trillion in assets, and respondents in the EU, UK, North America and Switzerland.