Chart of the Week
In 2024, US equities significantly outperformed other market segments. Since the end of February, the trend has reversed.
The major US indices have retreated since the start of the year (S&P 500 down by 3% on 19 March), while European equities are up (9% for the Stoxx 600). As a result, US and European equities now stand almost neck and neck in terms of performance since 1 January 2022.
OUR ANALYSIS
This market shift is the result of deteriorating economic indicators in the US and improving economic sentiment in Europe. The announcement of the ReArm Europe Plan and Germany’s debt-rule overhaul are seen as two pillars of a game-changing fiscal effort that can spur significant growth.
The apparently low volatility in European indices masks major disparities between sectors. The European defence sector has surged 73% so far this year (as of 19 March) and European banking, buoyed by the likelihood of persistently higher interest rates, is up 32%. At the other end of the scale, the property sector index has slipped 3% this year and European technology has gained a disappointing 3%, held back by the underperforming Nasdaq.
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Written on 21 March 2025. This is not an investment advice. Opinions subject to change.
See also: https://latribune.lazardfreresgestion.fr/en/economic-uncertainty-an-unprecedented-price-scissors-effect-between-europe-and-the-united-states/
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