Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.

After years of U.S. equity dominance, the tide may be turning—at least for now. In recent weeks, European and emerging market stocks have quietly outpaced their American counterparts, prompting a surge of interest from short-term traders.

This shift isn’t happening in a vacuum. A cocktail of catalysts is in play: the U.S. dollar has been weakening, valuations in U.S. stocks are historically stretched, and global central banks—particularly in Europe and China—appear poised to ease policy before the Federal Reserve. Add to that a fresh round of tariff developments, and the setup for non-U.S. equity exposure starts to look compelling.

For those interested specifically in Europe, Direxion Daily FTSE Europe Bull 3X Shares (Ticker: EURL) seeks daily investment results, before fees and expenses, of 300% of the performance of the FTSE Developed Europe All Cap Index.

Below is a daily chart of EURL, as of March 24, 2025.

Source: StockCharts.com, February 14, 2025.

Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. For the most recent month-end performance go to Direxion.com/etfs. For standardized performance click here.

Traders looking to act on this trend might consider leveraged ETFs for Europe and for emerging markets. While these tools are designed for short-term trading, they offer tactical ways to ride momentum—or position against it.

Bullish Catalysts for Europe and Emerging Markets

• Weaker U.S. Dollar: A softer greenback makes foreign assets more attractive and eases pressure on countries with dollar-denominated debt. That’s been a tailwind for global equities in recent weeks.

• Valuation Gap: U.S. equities are trading at a premium to historical averages, while many European and emerging market stocks still look cheap by comparison. According to MarketWatch, the Stoxx Europe 600 Index* outperformed the S&P 500 Index* by 10 percentage points over a recent 60-day window—the strongest relative showing in 25 years.

• Central Bank Divergence: J.P. Morgan notes that China is expected to continue loosening monetary policy as it aims to stabilize its real estate market and reinvigorate consumer sentiment. Europe may also cut rates before the Fed, offering a boost to equities.

• Tariff Developments: According to Finimize, investors in emerging markets are cheering hopes of U.S. tariff exclusions on key sectors—moves that could boost trade volumes and improve margins for companies reliant on exports.

Bearish Risks to Watch

• Global Uncertainty: Despite pockets of optimism, economic risks remain. In the U.K., recent volatility has already put pressure on IPO pipelines, with The Times reporting that fintech firm Ebury may delay a listing in London.

• Geopolitical Volatility: Ongoing tariff negotiations and war-related concerns—particularly around Ukraine—have added to investor jitters. As Investing.com notes, European shares remain sensitive to headlines, with markets swinging on any sign of peace or escalation.

What’s the Trade?

For traders betting on a short-term rerating in overseas markets, Europe and emerging economies are starting to flash green. With favorable currency trends, early policy moves abroad, and relative valuation support, there’s reason to take a closer look. But the road ahead is volatile, and headlines will likely drive near-term moves.

As mentioned above, EURL seeks daily investment results, before fees and expenses, of 300% of the performance of the FTSE Developed Europe All Cap Index*. For those interested in emerging markets, Direxion Daily MSCI Emerging Markets Bull Shares (Ticker: EDC) and Direxion Daily MSCI Emerging Market Bull Bear 3X Shares (Ticker: EDZ) seek daily investment results, before fees and expenses, of 300%, or 300% of the inverse (or opposite), respectively, of the performance of the MSCI Emerging Markets Index.

*Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.

S&P 500 Index: Standard & Poor’s^® selects the stocks comprising the S&P 500^® Index on the basis of market capitalization, financial viability of the company and the public float, liquidity and price of a company’s shares outstanding. The Index is a float-adjusted, market capitalization-weighted index.

The FTSE Developed Europe All Cap Index (ACDER) is a market capitalization weighted index that is designed to measure the equity market performance of large-, mid- and small-cap companies in developed markets in Europe.

The MSCI Emerging Market IndexSM (NDUEEGF) is a free float-adjusted market capitalization weighted index that is designed to represent the performance of large- and mid-capitalization securities across emerging markets countries.

The STOXX^® Europe 600 is a broad measure of the European equity market. With a fixed number of 600 components, the index provides extensive and diversified coverage across 17 countries and 11 industries within Europe’s developed economies, representing nearly 90% of the underlying investable market.

One cannot invest directly in an index.

Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund's concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause prices to fluctuate over time.

Leverage Risk - The Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day even if the Index does not lose all of its value. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with the Index and may increase the volatility of the Fund.

Daily Index Correlation Risk - A number of factors may affect the Fund’s ability to achieve a high degree of correlation with the Index and therefore achieve its daily leveraged investment objective. The Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.

European Economic Risk - Changes in imports or exports, changes in governmental or EU regulations on trade, changes in the exchange rate of the Euro (the common currency of certain EU countries), the default or threat of default by an EU member country on its sovereign debt and/or an economic recession in an EU member country may have a significant adverse impact on the economies of EU member countries and their trading partners.

Financials Sector Risk — Performance of companies in the financials sector may be materially impacted by many factors, including but not limited to, government regulations, economic conditions, credit rating downgrades, changes in interest rates and decreased liquidity in credit markets.

Healthcare Sector Risk — Companies in the healthcare sector may be affected by extensive, costly and uncertain government regulation, rising costs of medical products and services, changes in the demand for medical products and services, an increased emphasis on outpatient services, limited product lines, industry innovation and/or consolidation, changes in technologies and other market developments.

Industrials Sector Risk — Stock prices of issuers in the industrials sector are affected by supply and demand both for their specific product or service and for industrials sector products in general.

Additional risks of the Fund include Effects of Compounding and Market Volatility Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs Risk), Cash Transaction Risk, and Passive Investment and Index Performance Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.

ALPS Distributors, Inc.