The European stock market will overtake the US in 2022. In fact, it is the one with the best revenue and growth prospects of all developed markets, according to State Street, one of the largest asset management companies in the United States.
This is what the company strategist Gaurav Mallik has written, in a note published by Bloomberg, which highlights the following:
- European stocks offer attractive relative valuations relative to their US competitors. Profits will also increase more than in the United States.
- Quality stocks will do better than growth stocks due to mounting inflationary pressures.
- Cyclical stocks will benefit from infrastructure spending.
- The strategist is neutral on emerging markets for next year.
- Exposure to China can help shape return-to-risk exposure based on certain objectives.
- State Street believes the stock will do better than other asset classes, with attractive returns. Although, volatility can make an appearance.
JP Morgan also believes that the European stock market will do better than Wall Street
With this vision, State Street joins the US investment bank JP Morgan, which a few weeks ago published its perspectives for next year, in which it also expresses its preference for the European stock market over the American one.
JP Morgan has even dared to make numerical forecasts with respect to its forecasts for these markets.
Specifically, he believes the S&P 500 Index could rise 9 percent from current levels through the end of 2022; while the European stock market could climb up to 17 percent in the same period of time.
By country, it specifically recommends the Italian and the United Kingdom stock exchanges.
Thus, the worsening of the economic outlook due to the omicron variant of Covid-19 has not made a dent in the optimism of JP Morgan regarding the stock markets (especially the European one).
It relies on a higher immunity of the population due to vaccines and the spread of the disease itself.
The European stock market, somewhat behind the United States in the year that ends
Many analysis houses already expected this year that the European stock market surpassed Wall Street. However, after several months in which it was like this, it finally seems that US stocks are going to obtain a better balance than those of the Old Continent.
A few weeks after the end of the year, the S&P 500 (the main indicator of Wall Street) is revalued by 22.25 percent; while the Eurostoxx 50 climbs 19.40 percent.
The IBEX 35 is the great laggard of developed markets, since its revaluation does not reach 6 percent.
The Spanish stock market, among the favorites of Bank of America
Although, this delay makes the Spanish stock market one of the favorites of another investment bank, Bank of America, which believes that the attractive prices at which IBEX 35 companies are listed make them a good bet for the next year, together with the high weighting of the selective to utilities and banks.
“The Spanish and Italian stock markets tend to perform better when European utilities and banks do better than the rest, taking into account that these sectors are overrepresented in the stock markets of both European countries,” says a recent Bank of America report.
“We expect a 10 percent higher performance in the case of utilities in the face of a worsening of the PMI data for the euro area; and banks, helped by the rise in bond interest, as central banks become more restrictive, ”says the same report.