European stocks on track to outpace global rivals in January

MT HANNACH
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European shares are on the right track to exceed other major world stock markets this month, because fears of sweeping American rates and investors flee the shares of Wall Street technology.

The Stoxx Europe 600 index increased by 6.6% so far in January, its best monthly performance in two years. The United States S&P 500 index won 3.2%, while the Japan Topix increased by 0.1%.

The FTSE 100 index of London reached a fresh record on Friday and increased by 6.2% so far this month.

The gains have aroused a renewal of the hopes of a sustained renewal in the region equity markets. While some have sometimes performed – the Dax of Germany has increased by almost a fifth last year – as an entire Europe has been late in the United States in the last decade.

“After so many years of underperformance, little must happen before everyone becomes excited. . . Everyone warms in Europe, “said Roland Kaloyan, a general company strategist.

Investors piled up in American actions last year in the middle of excitement at the growth of artificial intelligence, with a small group of technological stocks again by generating earnings.

At the same time, the pricing threats of American president Donald Trump weighed on Europe, which sends about a fifth of its exports to the United States each year, while local political crises in countries like France have decreased the ‘Appétit of investors for bonds and shares.

But January has seen the greatest rotation of American actions in the actions of the euro zone in almost a decade, according to Bank of America, while investors fled richly appreciated technological actions in favor of European and growth actions, In particular banks, pharmaceuticals and luxury retailers.

This week Global technology sale Triggered by the Chinese start-up Deepseek Advanced artificial intelligence only accelerated this change, analysts said.

After the AI ​​oscillations, “investors have advanced. . . Europe ”, as the region has less exposure to technological actions, said Mohit Kumar, an economist at Jefferies.

In addition, Trump’s softer position on prices – he threatened 25% of tasks on the goods of Mexico and Canada from February 1, but has not yet managed to hit the euro zone with samples – was a relief for investors.

“Expectations for Europe were on the ground,” said Sharon Bell, action analyst at Goldman Sachs. “It has changed.”

After years of underperformance at Wall Street, European actions are also negotiated near their widest assessment Discount in the United States since at least the late 1980s, according to general social data data. The British market in particular has benefited from low assessments, according to analysts.

“I was surprised enough by the increased interest in British actions, it is probably because growth expectations are quite high compared to the rest of Europe,” said Bell.

“And obviously, it’s cheap. It could also be considered as a technology coverage. . . for diversification. »»

The high performance of European actions occurs even though the euro zone has trouble recovering from a sharp increase in energy and food prices triggered by the large -scale invasion of Ukraine by Russia, While the American economy continues to grow. This week’s data has shown the economy of the euro zone unexpectedly stagnated in the fourth quarter.

However, the prospect of new interest rate reductions by the European Central Bank can encourage investors, analysts said. In the United States, markets believe that inflationary pressures will force the US central bank to maintain higher rates for longer.

“If the market is starting to panic on inflation in the United States, it will also be more positive for European actions in comparison,” said Kaloyan de Socgen.

Additional reports by Ray Douglas

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