European healthcare wins as autos lose out
STOXX 600 flat
Energy sector leads
Just Eat surges after unit sale
U.S. futures edge down
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EUROPEAN HEALTHCARE WINS AS AUTOS LOSE OUT
In a post U.S-election world, new battle lines are being drawn in financial markets as investors mull the implications of possible new tariffs, higher for longer rates and lower corporate taxes.
And market players are already starting to see European healthcare as a winner and autos as a loser.
The region's healthcare stocks .SXDP are down 0.6% since Nov 5th, while autos are off 2.8%. The broader STOXX 600 .STOXX meanwhile is down 1.5%.
Valuation-wise, healthcare stocks are trading on a 12-month forward PE ratio of about 16.2 versus 6.2 for autos, according to LSEG Workspace.
The state of play is reflected in the results of Bank of America's latest European fund manager survey which found healthcare is still the biggest consensus overweight in the European sector space while autos are the least preferred.
So why is healthcare so favoured?
Its defensive nature is in the spotlight, as well as the fact that it benefits from a strong dollar given its earnings breakdown.
In a Wednesday note, Kepler Cheuvreux reiterated its overweight rating on healthcare and semis which they see as "two strong dollar beneficiaries".
JPM equity strategists also highlighted healthcare as a tactical buy on a stronger greenback this week, while they stay short on autos.
It helps that generally defensives are outperforming cyclicals in Europe in terms of EPS beats this reporting season, according to Barclays.
A few big names stand out.
On Tuesday drugmaker AstraZeneca AZN.L lifted its annual sales and profit forecast for the second time this year, and last week Novo Nordisk NOVOb.CO reported forecast-beating third-quarter sales of its popular Wegovy weight-loss drug.
Meanwhile in the autos space, Volkswagen Group VOWG_p.DE last month reported a 7% decline in third-quarter global deliveries, while BMW BMWG.DE and Mercedes MBGn.DE flagged sluggish demand and stiff competition in China in their third quarter sales.
(Lucy Raitano)
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WEDNESDAY'S OTHER LIVE MARKETS POSTS:
CAUTIOUS START FOR EUROPE AFTER TUESDAY'S SLIDE CLICK HERE
EUROPEAN FUTURES POINT AT FURTHER WEAKNESS CLICK HERE
'TRUMP TRADES' PAUSE FOR BREATH BEFORE US CPI CLICK HERE
Rates and inflation https://tmsnrt.rs/3U8HdD2
European shares mostly higher https://reut.rs/3Z3i1Cb
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