European equities are expected to outperform their U.S. counterparts in the first half of 2024, despite facing some short-term challenges.
Maximilian Uleer, head of European equity and cross-asset strategy at Deutsche Bank, expressed a positive outlook for the coming year. Uleer highlighted their recent call for an overweight position in Europe, believing it will prove more beneficial in the first six months of the year compared to the latter half.
One of the reasons behind this optimism is the performance of “surprise indices,” which measure how economic data surpasses or falls short of expectations by various margins. Uleer noted that these indices are currently picking up in Europe while declining in the United States, despite stronger absolute growth in the latter. Additionally, Uleer mentioned that the direction of economic data, particularly inflation figures, is more intriguing in Europe at present.
Ankit Gheedia, head of equity strategy at BNP Paribas, shared similar sentiments and also anticipated European stocks to outperform their U.S. counterparts in the coming year. Gheedia drew attention to the correlation between economic surprise differences in Europe and the U.S. and subsequent equity outperformance. Despite a bleak outlook and sentiment for the European economy earlier in the year, Gheedia highlighted signs of improvement, stating that things are “getting less bad” at present.
Source (CNBC)
