European Stocks on the Rise Amidst Wall Street's Struggles
As 2025 approaches, analysts are speculating whether it will mark a significant turnaround for European stocks. Historically, there has been a recurring belief that European markets will catch up to their American counterparts, which have dominated global stock performance for years. Currently, the valuation gap between the MSCI USA index, trading at 21.6 times its 12-month earnings, and the MSCI Europe index, at just 13.3, highlights a stark discrepancy that could favor European stocks in the near future.
Despite the optimistic outlook for European equities, recent market performance tells a different story. On November 14, European stock markets confirmed their upward trajectory, with Milan leading the charge at +1.7%. Other major markets such as Frankfurt (+1.55%), Paris (+1.25%), and Madrid (+1.2%) also showed positive gains, contrasting with the weaker performance of US indices. The Dow Jones saw a slight increase of +0.07%, while the Nasdaq experienced a minor decline of -0.24%.
The positive momentum in Europe can be attributed to strong corporate earnings, particularly in the luxury sector, with Burberry's shares soaring by +18.4%. This surge has positively influenced other luxury brands, including Kering (+3.76%) and Swatch (+3.3%). Additionally, Italian bank MPS saw a significant rise of +12.51% following a strategic placement by the Treasury.
The economic indicators also reflect a favorable environment in Europe, with the spread between German 10-year BTPs and Bunds narrowing to 121.9 points. The Italian annual yield has decreased to 3.57%, while the German yield stands at 2.35%. Meanwhile, commodities such as crude oil and gas have seen price increases, further supporting the European market's resilience.
In summary, while Wall Street continues to shine, European stocks are gaining traction, driven by favorable valuations and robust corporate performances. Investors are closely watching to see if this trend will continue into 2025, potentially signaling a shift in the global stock market landscape.
