Four reasons to favour euro zone over Wall Street
STOXX 600 up 0.3%
Suspected intervention drives yen
Philips surges on U.S. settlement
Wall St futures inch higher
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FOUR REASONS TO FAVOUR EURO ZONE OVER WALL STREET
Looking at the recent weakness across markets, J.P.Morgan notes how European stocks have done generally better than their peers on Wall Street, something that corroborates its recent upgrade of euro zone stocks.
Strategists at the U.S. investment bank believe euro zone stocks are unlikely to decouple from the direction set by Wall Street, but they still see better risk/reward on the old continent for a number of reasons.
Valuation: "Euro zone is trading at 13x forward P/E, vs S&P500 at 20x... buybacks yield has moved closer to the US, while dividend yields are remaining double the US"
Rates: "In what is historically atypical, ECB is set to start cutting ahead of the Fed, and by a greater magnitude. At the same time, PMI momentum is improving"
China: "Tactically better China performance will help euro zone vs the U.S. trade, and also UK (OW) and commodities"
Reversal risks: "We have held preference for growth over value, for high vs low quality and for large vs small cap... but do recognise the potential for reversal is very high"
So far in April, the S&P 500 .SPX has lost 3%, almost twice as much the loss suffered by the Euro STOXX 50 .STOXX50E.
(Danilo Masoni)
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FOR MONDAY'S OTHER LIVE MARKETS POSTS:
MORE OF THE SAME OR A RETURN TO Q1 FOR MARKETS? CLICK HERE
LAGGARDS PUSH UP THE STOXX, IBEX AWAITS SANCHEZ CLICK HERE
EUROPE SET FOR POSITIVE START TO THE WEEK CLICK HERE
THE YEN'S MYSTERIOUS MOVE CLICK HERE
euro STOXX 50 vs S&P 500 https://tmsnrt.rs/3JEZaVJ
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