Europe has always played a huge role in the US markets. The US Treasury reported that European investors and central banks held $1.6 trillion of US Treasury securities in June. More importantly they had purchased $114 billion of that over the past year, including $32 billion from April to June.
And although there’s no breakdown of US stock and corporate bond holdings by country, Treasury holdings are about one third of total foreign securities holdings. Assuming that ratio applies to European holders, then they hold a total of roughly $4.8 trillion in US assets, and added nearly $100 billion of that over the April-June period.
There’s little doubt that this has helped drive the stock market blowoff.
That cash flows into the US markets. Even if they are not direct purchases of US stocks, when European investors buy Treasuries, most of those purchases are from US Primary Dealers. The dealers use some of that cash they get in those sales to Europeans to buy stocks. When European investors, or US corporations in Europe, buy US assets, that adds liquidity to the US system and fuel for the inflation of the US stock market bubble.