BofA: European Stock Market Unlikely to Benefit from Economic Growth in 2024
Analysis of European Stock Market Prospects
(Adds new blog post)
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at
BofA's Outlook on European Stocks
BETTER GROWTH WON'T HELP EUROPEAN STOCKS, BOFA SAYS
BofA European equities analysts are normally pretty bearish, and true to form, they're out on Friday arguing that even though the European economy is picking up, they don't see this doing much for stocks in the region.
Positive Economic Indicators
On the plus side, they say: "The impact of German fiscal stimulus is finally set to materialize, with our economists expecting Euro area domestic demand growth to reaccelerate through year-end. Meanwhile, inflation is easing and ECB rhetoric has become noticeably less hawkish, creating a mini-goldilocks moment," they write.
Why Growth May Not Benefit Stocks
So shouldn't this be good news for the STOXX 600? Well no, BofA says.
Market Valuation Concerns
They argue a lot of the good news is already in the price: "the European market remains priced for perfection — with margin expectations at record highs and risk premia at a 20-year low."
Risks from AI and Market Momentum
And they don't think the situation warrants this since "AI models increasingly risk becoming commoditised, which could call into question AI capex expectations and threaten a reversal of the AI-led momentum."
Even though Europe has fewer actual chip makers, the AI boom has helped its stock market as well as those in Asia. Morgan Stanley reckons 70% of year-to-date MSCI Europe performance has been driven by the AI capex complex.
(Alun John)
*****
Earlier on Live Markets
HALF-TIME IN EUROPE: A BIT BUMPY CLICK HERE
TAKE YOUR BEST ECB GUESS CLICK HERE
MORE VOLATILITY DUE BEFORE THE MARKET TURNS CLICK HERE
RECORDS ON REPEAT FOR THE STOXX CLICK HERE
EUROPE BEFORE THE BELL: FUTURES JUMP CLICK HERE
STOCKS SHAKE IT OFF CLICK HERE
