Wall Street showed much resilience yesterday, with the S&P 500 once again hanging on a key technical support level. That’s leading to a further bounce today with US futures now sitting up 0.6%. In Europe, that’s also translating to more solid gains across the board as the risk mood perks up.
- DAX +0.8%
- CAC 40 +0.5%
- UK FTSE +1.0%
- IBEX +1.4%
- FTSE MIB +1.2%
Of note, the Stoxx 600 index is hitting record highs today but we’re starting to see major benchmark indices also gear up for such a move.
The DAX is about just over 1% away from its own record highs, with the CAC 40 just a whisker away by around 0.4%. In the UK, the FTSE 100 is already at fresh record highs after the inflation data earlier today here.
Meanwhile, the IBEX is also just 0.3% away from its record highs with the FTSE MIB not too far away being just under 2% away from its own record highs.
With worries about the AI trade and investors seeking alternatives to dollar-denominated trades, Europe is one spot that is seen picking up already since Q4 last year. Investors have already piled a lot of money into emerging markets but Europe also acts as an alternative hedge to broader market risks in general. Or should I say a hedge to the “US exceptionalism” trade, driven by big tech.
Besides diversification risks, valuations are also viewed better and more attractive in Europe. Perhaps the only real drag has been a stronger euro currency and lesser tech-related exposure diamonds in the rough to pick from.
