Latest news with #Stoxx600
CNBC
5 hours ago
- Business
- CNBC
This is where JPMorgan sees stock opportunities in Europe over the next year
The first five months of 2025 have thrown some curveballs into European markets — led by a more extreme and volatile U.S. tariff policy than most had anticipated, with the European Union now seeking to stave off a threatened 50% base rate. Familiar themes have continued to play out with new dimensions. Inflation across Europe is lower, interest rates are falling in the euro zone and U.K., and energy prices have cooled from the sky-high rates of recent years, though the tariff story has injected more uncertainty into the outlook. The Russia-Ukraine war rumbles on, amid dwindling hopes for a ceasefire brokered by U.S. President Donald Trump are fragile. For investors, attention has focused on the impact of higher defense spending pledges from European governments, particularly Germany — recently unleashed from longstanding restraints on fiscal spending. This has driven a nearly 50% gain in the Stoxx Europe Aerospace and Defense Index in the year to date. European equities have fared better than their U.S. counterparts so far, with the regional Stoxx 600 index up around 8.5% in the year to date, compared with around 1% for the S&P 500. What's next for European markets as the Northern Hemisphere enters the summer season and the generally quieter local period of stock trading? In a note to clients on Tuesday, JPMorgan equity strategists highlighted their preferred sectors for the next 12 to 18 months, during which period they see non-U.S. markets trading "increasingly more favorably" against their U.S. counterparts. Defense remains a top pick, they said, highlighting countries' move from spending just an average 2% of their gross domestic product on the sector to as much as 3.5% through the decade. Politicians and regional business leaders wish to focus this spending on European companies, representing a growing market share of European orders, according to JPMorgan. Other analysts have nevertheless previously told CNBC that U.S. firms will undoubtedly benefit, too. European defense stocks are somewhat stretched on a technical basis, given their recent valuation increases, the JPMorgan analysts said — "but we believe earnings will deliver," they added. The aerospace and defense sector can provide a "hedge on increased geopolitical uncertainty and as a beneficiary of rising defense spending," they say. Along with pure defense names such as Rheinmetall and Babcock International, the investment bank identifies potential secondary winners from higher defense spend, to the tune of IT firms SAP, Dassault Systems and Infineon, and materials firms Thyssenkrupp, Umicore and Elementis. They also highlight an expected regional infrastructure spending boost, particularly in Germany, as benefiting construction and materials stocks, along with some industrials. Companies to watch are those focused on rail, construction equipment, manufacturing, transportation, and those with contracting divisions in Germany, the note says. Top names here include Air Liquide, Alstom, Heidelberg Materials and Saint-Gobain. Chemicals will meanwhile emerge as a potential beneficiary of lower energy costs despite ongoing concerns about the overall economic outlook, JPMorgan analysts continue. It is also one of the only emerging market-exposed cyclical sectors — which are exposed to economic trends — that is "starting to perform less poorly," as opposed to the likes of autos and luxury, they said. Evonik Industries and Akzo Nobel are among its names to watch in this space. In the big picture, however, the analysts note some "challenging" competition for equities from the bond market, if yields become increasingly attractive. "Trade uncertainty is far from over, and the likely tariffs increase will end up much higher than anybody expected at the start of the year. The chances are that bond yields keep moving up, potentially for the wrong reasons," they write.
Business Times
5 hours ago
- Automotive
- Business Times
Europe: Stocks close lower as caution lingers on US trade policy progress
EUROPE'S main stock index closed lower amid broader declines on Wednesday as investors monitored progress in trade negotiations with the United States and assessed a slate of economic data from the region. The continent-wide Stoxx 600 index closed 0.61 per cent lower at 548.93 on the day, after two consecutive sessions of gains due to US President Donald Trump delaying tariffs on the European Union. Reports on Tuesday said EU policymakers had asked the region's leading companies to provide details of their US investment plans. German automakers including BMW, Mercedes-Benz and Volkswagen are in talks with Washington on a possible import tariff deal. The automobile sector was 0.7 per cent higher. Despite signs of a thaw in the trade tensions between the US and Europe, investors remained on edge as they struggled to keep up with the erratic nature of Trump's trade policies. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Over the next weeks, the market will be in a relatively tight trading range because investors are waiting to see what Trump does,' said Nick Brooks, head of economic and investment research at ICG. Brooks added that it was too early to say anything definitive about automakers talking directly with the US as negotiations lie in the hands of the EU as a whole. Germany's main stock index retreated 0.8 per cent after hitting a record high earlier in the session, while the mid-caps index hit its highest since April 2022. Fresh data indicated that German import prices unexpectedly contracted by 0.4 per cent year-on-year in April and that unemployment in Europe's largest economy grew at a faster-than-expected pace in May. Uncertainty stirred up by US trade policy shifts and price pressures are leading to higher expectations that the European Central Bank will cut interest rates next week. In France, the CAC 40 index closed 0.5 per cent lower, reversing earlier gains after gross domestic product figures showed slight growth in the first quarter, as expected. The defence index extended gains by 0.7 per cent as investors continued to flock towards the military ammunition companies amid little hopes of a pause to the ongoing Russia-Ukraine tensions. Reuters reported that Russia's conditions for ending the war in Ukraine include a demand that Western leaders pledge in writing to stop enlarging Nato eastwards and lift a chunk of sanctions on Russia. Elekta shares topped the Stoxx 600 after beating estimates for fourth-quarter sales, up 5.9 per cent. Kingfisher fell 3.6 per cent as the home improvement retailer's first-quarter results failed to impress investors. Stellantis dipped 2.2 per cent. The Jeep-maker named insider Antonio Filosa as its top boss. Global markets were focused on quarterly results from AI chipmaker Nvidia, due after the close of trading on Wall Street. REUTERS
Bloomberg
10 hours ago
- Business
- Bloomberg
European Stocks Resume Slide as US Deficit Concerns Weigh
European stocks fell, snapping a two-day winning streak, as investors sought direction from Nvidia Corp.'s earnings and awaited updates on the US budget deficit debate. The Stoxx Europe 600 Index fell 0.6% at the close in London as government-bond yields resumed their rise. Real estate and autos were among the few sectors that gained, while miners and retail lagged.
CNBC
a day ago
- Business
- CNBC
CNBC Daily Open: Elon Musk proves returning to the office has its benefits
Studies regarding the benefits of return-to-office mandates have been mixed. Some find that hybrid workers are as productive as on-site ones, while others conclude that in-person work cultivates mentorship and training. In some cases, however, the results of being physically in the office are unequivocal. Tesla CEO Elon Musk said on X that he would be "spending 24/7 at work and sleeping in conference/server/factory rooms." Investors appeared glad that Musk would be pivoting away from his involvement in politics to refocus on his companies, pushing up shares of the electric vehicle company nearly 7% Tuesday. Other tech stocks, such as AMD, Apple and Microsoft, also climbed, juiced by positive developments on the trade front. Apart from U.S. President Donald Trump's Sunday pause on tariffs of 50% on the European Union, U.S. National Economic Council director Kevin Hassett told CNBC's "Squawk Box" Tuesday that "we'll probably see a few more deals even this week." For the U.S. stock market to sustain its blazing start to the week, investors will be banking on Musk — and U.S. authorities — to continue their in-person work leading companies and negotiating trade deals with countries. S&P jumps to snap losing streakU.S. stocks popped Tuesday. The S&P 500 soared 2.05% and the Dow Jones Industrial Average gained 1.78%, with both indexes snapping a four-day losing streak. The Nasdaq Composite surged 2.47%. Europe's Stoxx 600 index added 0.33% as U.S. President Donald Trump described the European Union "quickly" scheduling meeting dates with America as a "positive event." Germany's DAX index climbed 0.83% to close at a record. All eyes on Nvidia's first-quarter earningsNvidia continues to see massive growth from sales of graphics processors. But with the Trump administration's new restrictions on the chipmaker's exports to China — which Nvidia says will cause it to take a $5.5 billion write-down on inventory — the mood heading into the chipmaker's earnings report, out Wednesday, is different than it's been in recent quarters. Musk will be 'super focused' on workTesla shares jumped nearly 7% after CEO Elon Musk wrote in a post to his social media platform X that he will return to "spending 24/7 at work" and needs to be "super focused" on his companies. Musk's involvement in politics, such as endorsing Germany's far-right AfD Party, has affected Tesla's reputation in Europe, causing April sales on the continent to plunge 49% year on year, according to the European Automobile Manufacturers' Association. U.S. Steel to be acquired at $55 per shareJapan's Nippon Steel is expected to close its acquisition of U.S. Steel for $55 per share, sources familiar with the matter told CNBC's David Faber. U.S. Steel gained about 2% Tuesday to close at $53.04 per share, and rose more than 20% Friday on the back of Trump's clearance of the deal. The $55 per share bid for U.S. Steel is the offer that Nippon originally made for the company before the deal was blocked in January. U.S. consumer confidence in May soaredConsumer optimism in the U.S. was much better than expected in May, data from the Conference Board's Consumer Confidence Index showed. May's reading came in at 98.0, far higher than the Dow Jones consensus estimate for 86.0. Much of the positive sentiment, according to board officials, came from developments in the U.S.-China trade impasse. May's rebound followed five straight months of declines. [PRO] Stocks to be 'rangebound': JPMorganDespite the surge in stocks Tuesday, JPMorgan thinks the S&P 500 could "remain rangebound," with those gains being short-lived because of two reasons. The bank recommends clients to buy call options on this index to hedge against potential downside. Diamonds are forever? Not with tariffs in the way They might be made of the hardest material on earth, but diamonds, with their complex supply chains and expensive price tag, are particularly fragile to U.S. President Donald Trump's aggressive tariff agenda. The precious mineral is facing a baseline 10% import duty to the U.S. — a market accounting for over half of the global demand for polished diamonds. The sector is also bracing for additional duties should Trump's 90-day pause come to an end with no new agreements. "It's very clear that the diamond industry, on a global level, has been facing a perfect storm of challenges," Karen Rentmeesters, chief executive of the Antwerp World Diamond Centre told CNBC, adding that tariffs are just "the latest blow."
Business Times
a day ago
- Business
- Business Times
Europe: Shares gain on defence boost, tariff delay aids sentiment
EUROPEAN shares closed higher on Tuesday with defence stocks boosting the market after US President Donald Trump threatened additional sanctions on Russia, while optimism lingered from the delay of US tariffs on the European Union. The Stoxx 600 index closed 0.33 per cent higher at 552.32, building on Monday's 1 per cent rise after Trump gave the EU a reprieve on his threatened 50 per cent tariffs. EU policymakers have asked the bloc's leading companies and CEOs for US investment plans to prepare for trade talks with Washington, according to two sources. The bloc set up trade meetings with the United States, a step Trump said was positive. The latest flip-flop on EU tariffs highlights the unpredictability of Trump's trade policies, that have been shaking investor confidence and raising concerns over the fiscal health of the US economy. The uncertainty has been pushing investors away from US assets to find other safe havens internationally. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Europe's defence index jumped 1.7 per cent to a record high, after Trump said he would recommend additional sanctions on Moscow, amid escalating tensions between Russia and Ukraine. 'There is recognition of the fact that Trump is less close to Putin than he had been and that there is more likely to be a prolonged conflict in Ukraine rather than the quick end' said Nick Saunders, CEO of Webull UK. 'Defence is definitely a sector that is in fashion at the moment.' Technology shares rose 1.1 per cent, while industrials added 0.9 per cent. 'People are actually looking for value at the moment and trying to pick the most profitable stocks rather than assuming that the rising tide is going to float all boats,' said Saunders. In Germany, the DAX 40 ended 0.8 per cent higher, closing at an all-time high, after a survey indicated consumer sentiment is set to improve slightly heading into June. However, the German Chamber of Commerce and Industry (DIHK) forecast a contraction in the economy this year. Euro zone government bond yields dipped on the day. Britain's FTSE 100 share index ended 0.7 per cent higher as investors returned following a holiday on Monday. French benchmark index CAC 40 was flat after preliminary data showed inflation fell to its lowest level since December 2020 in May, with the government hinting at proposals to get public finances under control in early July. FLSmidth rose 3.4 per cent after Goldman Sachs raised the mining and cement technology supplier's rating to 'buy' from 'neutral' on expectations of higher margins. REUTERS
