Favour Europe over Wall Street, Barclays says

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STOXX 600 down 0.9%

Financials top drag

Fed minutes eyed

U.S. futures tick lower

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Now that the earnings season in Europe is well past its peak and it's almost established that the numbers weren't as bad as many had feared, how should investors position, given that much of the good news has arguably been priced in?

Barclays has looked into it to conclude that portfolio managers should focus on relative value, which it believes favours European equities over Wall Street, along with select value/cyclicals and banking stocks.

"As upside to global equities feels constrained now, we believe that EU equities score better than US ones on both earnings and valuations metrics, while positioning is also on their side." say Barclays strategists led by Emmanuel Cau.

"The region has been underweight in global portfolios for a long time. However, with the recent narrowing in growth prospects... and worries about European integration receding somewhat, demand for European stocks is starting to pick up".

So, that's why Barclays is keeping an overweight Europe versus the U.S.. However, even though the region should enjoy a strong relative performance, the absolute upside looks limited. Its STOXX 600 .STOXX target in fact remains at 475 points, which is just 2.4% above Monday's close.

(Danilo Masoni)



European stocks are a sea of red this morning, with a few less-than-stellar results weighing on the pan-regional index. A drop in mining shares is not helping either.

Basic resources .SXPP stocks are languishing near the bottom of the list, with the sector down 2.3%, weighed on by mining giants Glencore GLEN.L and Rio Tinto RIO.L which are down 2.7% and 2.6% respectively.

Real estate .S8730P .SX86P is also faring poorly, down 1.5%, while banks .SX7P are down 1.3%.

Fresenius FREG.DE shares are down 5% while Fresenius Medical Care FMEG.DE shares are 10.3% higher, as the market digests the German healthcare group's latest results and reshuffle.

BE Semiconductor BESI.AS shares meanwhile are rising 7.5% after results.

Media names .SXMP are only sector just about bucking today's downward trend, trading 0.1% higher.

(Lucy Raitano)



Is it really good news? Probably yes, probably not.

Economies from the United States to Germany to Britain are showing an unexpected pick-up in business activity, but markets are again giving a thumbs-down to these indicators.

Just as inflation once again becomes the biggest pain point for investors after they conveniently put away such worries last month, strong growth cements the case for higher interest rates.

Fed funds futures traders are now pricing for the Fed's benchmark overnight interest rate to reach 5.36% in July and end the year at 5.18%.

And financial markets now point to a 95% chance of an increase in the Bank of England's official rate next month, up from 90% early on Tuesday.

That is depressing the mood for equity traders.

Asian stock markets floated in a sea of red on Wednesday following an ugly sell-off on Wall Street.

Ten-year U.S. Treasury yields rose to 3.966%, the highest since November. The dollar and sterling strengthened on expectations of further rate hikes.

Inflation data from Germany and Italy due later on Wednesday will offer clues on price pressures.

In this risk-off environment, the stage is set for the release of the minutes of the Fed's meeting from last week.

Markets will scrutinise it for signs on how high officials project interest rates will go following recent data that showed stronger-than-expected U.S. employment and consumer prices.

Political tensions are also heating up as President Joe Biden and Russian President Vladimir Putin spar verbally, presenting starkly different views of the world and the Ukraine war.

China said on Wednesday that its top diplomat, Wang Yi, met Russia's security chief and both sides agreed that peace and stability in the Asia-Pacific region should be resolutely upheld, and opposed the introduction of a Cold War "mentality".

On the corporate front, Bloomberg News reported that sovereign wealth fund Abu Dhabi Investment Authority is among the parties considering a bid for a 34% stake in Associated British Ports that could be valued at about 2 billion pounds or more.

And finally, consulting giant McKinsey & Co, which is known for advising businesses on a variety of projects including layoffs, plans to cut about 2,000 jobs, in one of its biggest round of layoffs, Bloomberg News reported.

Key developments that could influence markets on Wednesday:

European economic data: German and Italian Jan inflation, Germany Feb Ifo survey

European results: Iberdrola, Lloyds, Telefonica

U.S. results: eBay, Nvidia

U.S. Fed releases minutes from Jan meeting

(Anshuman Daga)



European futures are heading lower this morning, with those on the STOXX 50 .STXEc1, DAX FDXc1 and FTSE FFIc1 all down 0.3%-0.4%. U.S. futures are up by a marginal 0.1%.

The day has already kicked off with the release of Germany's latest inflation, which showed a rise of 9.2% on the year in January and a month-on-month increase of 0.5%. Italy will follow suit with CPIs at 0900 GMT.

At the open, eyes will be on Lloyds LLOY.L, after the UK lender reported flat annual profit for 2022 on Wednesday.

In more positive news, carmaker Stellantis STLAM.MI said on Wednesday operating profit grew 17% in the second half of last year, and Europe's biggest utility Iberdrola IBE.MC expects net profit to grow this year.

Post-European close, traders will be pouring over newly released minutes from the Federal Reserve's last meeting for hints over how the central bank's tricky task is going.

(Lucy Raitano)


Duel of the Rateshttps://tmsnrt.rs/3xIypK4

Europe vs Wall Sthttps://tmsnrt.rs/3YUglbV


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