(Bloomberg) -- Investors are betting that Europe will drive the next leg of the global equity rally, broadening their playbooks as a more expensive US market...
-- Investors are betting that Europe will drive the next leg of the global equity rally, broadening their playbooks as a more expensive US market evokes memories of the dot-com bubble.Powell Reiterates Fed Doesn’t Need to Be In Hurry to Cut RatesHedge funds are now the most exposed they have ever been to European stocks relative to a global benchmark, according to Goldman Sachs Group Inc. data.
Despite Europe’s gains this month, its benchmark Stoxx 600 Index still looks cheap. Its forward 12-month price-to-earnings ratio of about 14 is only slightly higher than its long-term average, according to data compiled by Bloomberg. Even excluding richly valued tech stocks, the S&P 500 is in expensive territory.
BlackRock Inc.’s EMEA iShares team including Karim Chedid and Laura Cooper are seeing signs that funds from clients are making their way back to Europe. Going by track record, European equities have been underperforming their US peers relentlessly since the aftermath of the global financial crisis, with brief periods of relative recovery. The last significant episode of outperformance lasted about four months, between October 2022 and March 2023, and saw the Stoxx 600 beating the S&P 500 by more than 12 percentage points over that period.
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