Latest news with #MSCIEuropeIndex
Economic Times
5 days ago
- Business
- Economic Times
Regulatory gray area makes investing in LVMH, BP tough For Indian retail
The world's largest sovereign fund, Norges Bank, credited European stocks for the gains this year in a rare episode in recent years. But Indian retail investors, who on paper can invest lakhs of USD overseas, are missing the European bus as an unreasoned regulatory cap holds back mutual funds from launching schemes that could benefit from what appears to be a continental renaissance. The MSCI Europe Index has soared 22% since January, easily
Time of India
5 days ago
- Business
- Time of India
Regulatory gray area makes investing in LVMH, BP tough For Indian retail
The world's largest sovereign fund, Norges Bank, credited European stocks for the gains this year in a rare episode in recent years. But Indian retail investors, who on paper can invest lakhs of USD overseas, are missing the European bus as an unreasoned regulatory cap holds back mutual funds from launching schemes that could benefit from what appears to be a continental renaissance. The MSCI Europe Index has soared 22% since January, easily
Yahoo
04-04-2025
- Business
- Yahoo
Trump tariffs may hammer these luxury goods giants that cater to the wealthy
Just because they sell $5,000 handbags and $20,000 watches doesn't mean it will be smooth sailing in the era of Trump tariffs for the world's largest luxury goods companies. It may be anything but smooth, if JPMorgan analyst Chiara Battistini is right. "The new import duties are worse than what had been anticipated, and a material headwind to the sector, that generates 20-25% of sales on average in the US, fully exports from Europe, with no flexibility to shift some of the production capacity to North America, and with pricing power that is increasingly questioned," Battistini wrote in a note on Friday. Trump's severe tariffs have called the profit outlook for almost every company and sector into question. President Trump unveiled a baseline tariff rate of 10% that will go into effect on April 5. A higher tariff rate will start on April 9 for about 60 countries that the administration considers to be the worst trade offenders. Read more: What Trump's tariffs mean for the economy and your wallet Europe, where many luxury goods giants such as LVMH ( Kering ( and Burberry (BRBY.L) manufacture their goods, was hit with a 20% tariff. The Kraneshares Global Luxury Index ETF (KLXY) declined by 10% this past week, worse than the MSCI Europe Index's drop of 4%. The ETF counts LVMH, Kering, and Moncler ( as top holdings. The sector will not only see their cost of goods sold rise meaningfully but also face rising odds of a US recession — suggesting a pullback in demand even among high-income consumers. "Beyond the margin pressure short term, we are even more mindful that the impact from the announced tariffs will also likely translate into a headwind to the underlying demand, in both the short term (due to higher level of uncertainty and stock market volatility, usually both impacting consumer confidence) and medium term (due to likely rising inflation," Battistini wrote. Read more: How to protect your money during economic turmoil, stock market volatility JPMorgan's research shows luxury goods players are already jacking up prices to compensate for the anticipated costs of tariffs. Ferragamo ( raised the price of its Hug handbag by 4% and its elasticated ballet flat shoes by 6% both in the UK and France within the last week. The Hug handbag now sells for $3,100, while the elasticated ballet flats fetch $695. The company also raised the price of the elasticated ballet flat shoes by 3% in China and by 8% in Japan last week, JPMorgan's research found. The price of Hug handbags went up by 3% in Japan as well. "The aspirational consumer is going to be in hibernation as the impact of February/March Challenger job cuts report planned layoffs start to hit," Tematica Research chief investment officer Chris Versace told me. JPMorgan's Battistini warns Swiss watchmakers could be hard hit given a possible demand pullback and already competitive market dynamics. Versace said, "Those costs into the US are going to move meaningfully higher — so much for a new Rolex, despite all the new models they just unveiled." Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email Click here for all of the latest retail stock news and events to better inform your investing strategy
Forbes
31-03-2025
- Business
- Forbes
European Stocks Surge Ahead Of Wall Street In Q1 2025
(Photo by THIERRY CHARLIER / AFP) (Photo by THIERRY CHARLIER/AFP via Getty Images) U.S. stocks stumbled into the end of the first quarter, with the S&P 500 sliding 5.1% and finishing 3.1% below its 200-day moving average. The post-election optimism that excited markets late last year has given way to unease as investors confront rising policy uncertainty and new geopolitical risks. However, despite the market turmoil in America, some regions of the world oddly benefit from the Trump administration's change in geopolitical strategy. Europe, after years of stock market irrelevance, is finally starting to shine. European equities just delivered their strongest quarterly performance in decades, outperforming the S&P 500 by 18.4% in dollar terms, the widest margin in over 30 years. The outperformance comes as a surprise to many, especially given Mario Draghi's downbeat assessment of European competitiveness just six months ago. What has changed? MSCI Europe quarterly return relative to MSCI USA Valuation is one reason behind the rally. European stocks, which have traded at a discount to U.S. equities for more than a decade, look attractive to global investors in search of value. As of March 30, the MSCI Europe Index trades at a forward P/E ratio of just 14.6x, compared to the S&P 500's 20.8x. That kind of valuation gap provides a point of refuge for investors concerned about the relatively high multiples in the growth-oriented S&P 500. But valuation alone didn't spark the rally. Germany's pivot toward aggressive fiscal stimulus, triggered by the United States desire to step back from its traditional role as the global security guarantor, has boosted the region's outlook for spending and growth. Germany's new fiscal initiatives include a €500 billion infrastructure investment fund and an exemption from the constitutional debt brake for defense spending. This fiscal impulse is anticipated to widen Germany's deficit and revive economic growth. Fitch Ratings projects that the deficit could increase to between 4% and 4.5% of gross domestic product by 2027, up from 2.6% in 2024. The policy shift is creating hope that the era of lackluster GDP growth for European economies may finally be over. "In more than 30 years in markets, I've rarely seen such a sharp turn in Euro-optimism," Holger Schmieding, chief economist at Berenberg, told Bloomberg. While the positive catalysts in Europe are strong, much of the recent strong relative performance stems from weakness in the United States. President Trump's tariff policy, along with the potential for higher consumer prices and an economic slowdown, has reignited stagflation fears. In anticipation of slower U.S. economic and corporate profit growth, investors are shifting out of high-momentum names like Nvidia and Tesla and toward defensive, lower-valuation segments of the market. That plays to Europe's strengths, as its stock indexes tend to be more heavily weighted toward value-oriented sectors. The strength of the euro reinforces the shift. The currency has rallied from 1.024 in February to nearly 1.082 by late March. U.S. dollar investors buying European equities could get an added benefit from a strengthening euro. Defense stocks have led the indexes higher. Germany's Rheinmetall AG has seen massive gains, fueled by expectations of long-term rearmament across Europe. Thyssenkrupp AG, historically known for steel and industrial manufacturing, has also rallied as investors bet on infrastructure modernization and potential reconstruction efforts in Ukraine. Rheinmetall has surged 113% in 2025, and Thyssenkrupp has jumped 130% in the last three months. Outside of Germany, stock markets in other countries are doing even better. While EWG, the iShares MSCI Germany ETF, has risen 17.5% in Q1 2025, GREK, the Global X MSCI Greece ETF, has jumped 25% in Q1 2025. EWP, the iShares MSCI Spain ETF, has climbed 23.7%. European ETFs have outperformed the U.S. market so far in 2025. Banks and insurance companies have also been among the top performers in the Euro Stoxx 600. Rising interest rates due to the anticipated increase in supply from additional government spending have lifted financial stocks. Despite the optimism, Europe faces structural hurdles. As the Draghi report highlighted, its capital markets remain fragmented and onerous regulations inhibit innovation. Furthermore, there is no evidence yet that corporate earnings will mirror the advance in share prices. Finally, let's not forget China, whose economic uncertainty could be an issue for Europe's export-heavy economy. Still, Europe's rally is real and broadening. But sustaining the outperformance will require more than attractive valuations and reactive flows out of the United States. The region must deliver on promised fiscal stimulus, manage growing geopolitical risk, and navigate a potential trade war before investors can be confident in the rally's durability. For now, investors are betting the momentum can continue. The payoff will depend as much on Washington as on Brussels or Berlin.
Euronews
19-03-2025
- Business
- Euronews
Barclays Europe CEO on what Trump's tariffs could do to the EU economy
'There is a foundation to believe in the attractiveness of Europe, especially on a relative basis,' Francesco Ceccato, Barclays Europe CEO, told Euronews' Business Editor, Angela Barnes, in an exclusive interview. 'What we've seen in the year-to-date period is clearly a compression in the US stock market, for example, and an increase in the indices that I look at for the European stock market.' According to a recent report from Morgan Stanley, European equities have this year outperformed US stocks by the widest margin since 2000. The MSCI Europe Index has risen over 9% since January, beating the S&P's slide of 4.5%. To turn to the latest Fund Manager Survey from Bank of America, released this Tuesday, the data also showed the most significant rotation from US to European equities since records began in 1999. A net 39% of fund managers now hold an overweight position in European equities, the highest level since mid-2021. On the other hand, 23% of investors report being underweight US stocks. Despite the recent rally, researchers from Goldman Sachs have predicted that the uptick isn't fleeting. Last week, they suggested that European equities would rise as much as 6% in the next 12 months. 'There is clearly a lot of concern amongst the investors…around what some of the trade disruption might do to the economy,' Ceccato said, referring to tariff threats from US President Donald Trump. The White House noted on Tuesday that new reciprocal tariff rates would take effect on 2 April, despite suggestions that they could be delayed. While the US is looking to mirror some trade barriers established by other nations, it has also imposed another raft of levies. Trump has - for instance - introduced a 25% tariff on all steel and aluminium imports. That's as well as placing a 20% tariff on incoming Chinese goods and threatening a 200% levy on EU alcohol imports. Trade policies are likely to have 'significant' impacts on the US, said Ceccato, harming growth and pushing up inflation. Ceccato added that Europe is also set to suffer from a tariff war, although economies could see a boost from extra defence spending. "The euro area has roughly €480 billion of goods exports to the US. Now, at the moment, the latest models that our research team have looked at are relatively mild in terms of the tariff assumption that's being made. But were there to be a 25% tariff on all of those goods, that could actually tip the eurozone into recession,' he said. Meanwhile, Germany's parliament has just this week approved a reform of its debt brake proposed by chancellor-in-waiting Friedrich Merz, which allows for more fiscal flexibility. Defence spending of more than 1% of GDP will be exempted from the strict debt limit and state governments will be allowed to run annual deficits of up to 0.35% of GDP. The bill will also establish a €500 billion fund to invest in the country's ageing infrastructure. On the prospect of greater military spending, Europe's defence companies are cashing in. Rheinmetall shares are up around 124.8% in the year to date, Thales stock has jumped 79.2%, while shares in Leonardo have risen 82.9%. Discussing how Europe can further improve its competitiveness, Ceccato noted that the EU still needs to work on developing deeper pools of capital. 'We also need to think creatively about how we can use…the firepower that we have in some of our European institutions to pair up with private capital, that is, institutional capital that can be brought to bear to tackle some of these Herculean challenges,' he said. Ceccato explained that if Europe wants to effectively support its industries, it cannot solely rely on retail investments made by members of the public. Compared to EU firms, companies in the US still find it easier to access capital due to the scale of the market and flexible funding options. A more risk-averse sentiment in the EU, as well as a more fragmented financial market across diverse member states, can hamper innovation. "This is still all about capital, capital, capital," said Ceccato. Price pressures across the eurozone were revised lower in February, reinforcing expectations that inflation is steadily returning towards the European Central Bank's 2% target. Headline inflation rose by 2.3% year-over-year last month, down from 2.5% in January and below the previous estimate of 2.4%, according to Eurostat data released on Wednesday. Core inflation, which excludes energy and food, eased to 2.6% from 2.7% in January, marking its lowest level since January 2022. Among EU members, France recorded the lowest annual inflation rate at 0.9%, followed by Ireland (1.4%) and Finland (1.5%). Hungary (5.7%), Romania (5.2%), and Estonia (5.1%) registered the highest rates. On a monthly basis, Belgium saw the steepest inflation increase, rising 2.4%, followed by the Netherlands (1.4%) and Estonia (1.3%). Portugal was the only country to experience a price decline (-0.1%), while consumer prices remained stable in Greece and Croatia. In February 2025, services contributed the most to euro area inflation (+1.66 percentage points), followed by food, alcohol & tobacco (+0.52 pp), non-energy industrial goods (+0.14 pp), and energy (+0.01 pp). Despite the easing inflation figures, investor expectations on future price trends remain subdued. The latest Bank of America Fund Manager Survey indicated that only a net 7% of European investors expect lower inflation in the eurozone over the next year, the weakest sentiment since April 2022. Meanwhile, 53% of surveyed European investors believe the new Trump administration will have a negative impact on global growth but a positive effect on inflation. European markets are also reacting to Germany's recently announced fiscal stimulus and expanded European defence spending, both of which are seen as potential growth catalysts. A significant 70% of investors polled view German fiscal stimulus as the most likely driver of stronger European economic expansion. The euro fell 0.4% on Wednesday, dipping below the 1.09 level against the dollar ahead of a closely watched Federal Open Market Committee (FOMC) meeting later in the day. The US Federal Reserve is expected to maintain its benchmark interest rate in the 4.25%-4.5% range, with Chair Jerome Powell likely to reiterate a cautious approach to rate cuts. The central bank will also unveil updated economic projections, including its inflation outlook and interest rate forecast—widely known as the "dot plot". In December, the Fed had already revised its inflation projections upward while reducing the number of expected rate cuts for 2025 from four to two. There is broad speculation that policymakers may further adjust inflation forecasts to account for potential tariff-related price pressures under the Trump administration. Yields on European sovereign bonds edged lower, with German Bund yields declining three basis points to 2.78%. Equities in Europe traded higher, with the Euro STOXX 50 rising 0.3%, mirroring the gains of Germany's DAX. Investors reacted positively to progress on a potential ceasefire in Ukraine. On Tuesday, US President Donald Trump and Russian President Vladimir Putin reportedly agreed to a 30-day pause in attacks on energy and infrastructure sites in Ukraine and Russia. Trump also suggested that discussions on a complete ceasefire were under way. Oil prices retreated on Tuesday, with Brent crude remaining steady at $70 per barrel this morning. Italy's FTSE Mib and France's CAC 40 outperformed, gaining 0.9% and 0.6%, respectively, largely driven by bank stock gains. Shares of Banca Monte dei Paschi di Siena – the world's oldest bank – surged more than 3% to €7.87, reaching their highest level since August 2022, after Deutsche Bank upgraded the stock from 'Hold' to 'Buy'. Analysts at Deutsche Bank suggested that investors were overlooking opportunities in the bank's bid for Mediobanca, whose shares also rose 1.9%.
