BofA lifts STOXX 600 annual target to 530 points
European equities remain close to all-time highs despite the global trade war and escalating tensions in the Israel-Iran conflict, the Wall Street brokerage said.
"The main reason for the resilience, is that these events (Israel-Iran conflict, trade war) have not yet translated into a clear-cut weakening in global growth," BofA said, maintaining its "negative" stance on the region's equities.
The brokerage's current target for the pan-European benchmark index still implies a nearly 1.1% downside to its Thursday close of 535.86.
While a trade deal between the U.S. and China as well as a benign May U.S. inflation report have brought some relief to financial markets, pressures from tariffs and escalating tensions in the Middle East are expected to weigh on global economic growth.
BofA upgraded the European mining sector to "overweight" from "marketweight", citing attractive valuations after significant underperformance, with support from a weaker dollar.
The brokerage downgraded airlines to "underweight" from "marketweight", on potential risks from higher oil prices if Middle East tensions escalate.
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