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Business Standard
a day ago
- Business
- Business Standard
Europe stock markets stage world-beating rally as trade war backfires
By Sagarika Jaisinghani and Julien Ponthus Europe's equities have emerged clear winners worldwide as the region's economic outlook brightens at a time when President Donald Trump's trade war hobbles US financial markets. Five months into the year, eight of the world's 10 best-performing stock markets are in Europe, according to data compiled by Bloomberg. That list features Germany's DAX Index with a rally of more than 30% in dollar terms, as well as peripheral markets such as Slovenia, Poland, Greece and Hungary. The pan-European Stoxx 600 Index is beating the S&P 500 by a record 18 percentage points in dollars, powered by Germany's historic fiscal spending plans and a stronger euro. Market participants say there's more to come as resilient corporate earnings and attractive valuations make the region a safer bet when concern over trade and fiscal debt grips the US economy. 'Europe is back on the map,' said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia. 'We are getting more questions about Europe now over the last two months than we did over the last 10 years.' The outperformance, if it lasts, will mark a turnaround from years of sluggishness for European markets. And the rally may just feed on itself: As stocks on the continent rise, they're likely to attract fresh assets from around the world, equity bulls say. UBS Group AG analysts said in a recent note that investors' shift away from US assets will channel €1.2 trillion ($1.4 trillion) into Europe's stock market over the next five years. An early impetus for this year's gains came from the proposal by Berlin — famous for its fiscal austerity — to spend hundreds of billions of euros on infrastructure and defense. Citigroup Inc. economists expect the reform to boost growth across the euro area from the second half of 2026. On the other side of the Atlantic, investors are on recession watch again amid concerns around inflation and America's fiscal deficit. Sentiment toward Treasuries took a hit in May after Moody's Ratings stripped the US of its top credit grade, with bond yields also climbing in response to Trump's tax-cut proposals. And in a blow to the president's trade agenda, a US court has issued a rare rebuke blocking many of the import taxes he has threatened and imposed on key partners. A proposed tax measure is also raising alarm on Wall Street as it would increase tax rates for individuals and companies from countries with 'discriminatory' tax policies, potentially driving away foreign investors. The S&P 500 rebounded in May, but remains a laggard for the year. The index has gained only about 0.5% in 2025 compared with a 12% jump in the MSCI All-Country World Index excluding the US. It also ranks 73rd among the 92 indexes tracked by Bloomberg. Beata Manthey, head of European and global equity strategy at Citigroup, said the euro area is in 'a relatively good place' as the European Central Bank has room to reduce interest rates further, while equity valuations aren't stretched. 'Of course if there's a US recession, no market would go unscathed, but the lack of exuberance in Europe makes it more resilient to a deeper selloff,' Manthey said. 'Investors had shunned the region for so long that inflows are still tiny compared with outflows of the past few years.' Peripherals Winning A slate of Europe's smaller markets is dominating the leader boards this year. Slovenia's blue-chip SBI TOP Index is the world's second-best performing gauge with a rally of 42% in dollar terms, behind Ghana's benchmark. Poland's WIG20 Index has gained 40%, while benchmarks in Greece and Hungary are up more than 34% each. Strategists at Societe Generale SA have recommended peripheral European markets this year, citing a wider risk premium as well as relative political stability. The team continues to predict an outperformance as they expect sovereign bond yields to be more protected than in some of the big spenders such as France and Germany. Defense stocks have been among the biggest winners this year, with seven of the 10 best-performing stocks in the Stoxx 600 related to the sector. All have surged at least 90%, with German contractors Renk Group AG, Rheinmetall AG and Hensoldt AG leading the pack. Banks and insurance stocks have also outperformed in 2025. 'What's not to love about European equities?' said Florian Ielpo, head of macro research at Lombard Odier Investment Managers. 'In the US you're punished for taking risk, but in Europe you're rewarded for it. Inflation looks contained, and there's finally some visibility. In the US, you're still wondering what will happen tomorrow, what tweets will you see.' Earnings Optimism Corporate earnings have been a bright spot, with first-quarter profits at MSCI Europe companies rising 5.3% compared with expectations of a 1.5% decline, according to data compiled by Bloomberg Intelligence. While many executives tempered their outlooks given lingering trade uncertainties, fewer analysts have cut earnings estimates in the past weeks, suggesting the worst of the downgrades may be over. To be sure, the global trade outlook remains a key risk. A federal appeals court has offered Trump a temporary reprieve from the ruling threatening to throw out the bulk of his tariff agenda. The president also said he would be increasing levies on steel and aluminum to 50% from 25%. Many European industries including miners, automakers and luxury goods are heavily exposed to international markets for revenue. Analysts this year have reduced Stoxx 600 earnings estimates for the coming 12 months by about 1.4%, according to data compiled by Bloomberg. Some market forecasters still bet European stocks will race past their US peers, with the team at JPMorgan Chase & Co. calling for the biggest outperformance on record. On average, a Bloomberg survey of 20 strategists found the Stoxx 600 is expected to gain another 1% from current levels. 'For the first time in a really long time I do believe there's a chance that European stocks can outperform the US market,' said Francois Rimeu, a strategist at La Francaise Asset Management. 'Now for this outperformance trend to hold, earnings will need to show some real growth next year.'
Mint
23-05-2025
- Business
- Mint
UBS Client Can't Sue Bank Over Broker's Alleged Affair With Wife
(Bloomberg) -- A UBS Group AG client, who alleges his wealth adviser had an affair with his wife and tried to help her take control of family funds, can sue the broker but not the Swiss firm, a New York judge ruled. Richard Kallman claims UBS failed to supervise Ira Walker as the managing director allegedly schemed with Kallman's wife to move the family's trust fund to the firm and then disburse hundreds and thousands of dollars from it. Kallman has said Walker inserted himself into the couple's divorce, demanding millions of dollars on the wife's behalf. Kallman has been seeking $10 million in damages from UBS and Walker, who has publicly disputed the allegations. In a ruling on Thursday, Judge Lyle Frank said many of the lawsuit's claims must be decided in arbitration, per terms Kallman accepted as a trustee when he and his wife, Kineret, moved the fund to UBS. However, a claim that Walker and Kineret intentionally inflicted emotional distress on Kallman can proceed toward trial, according to the ruling. UBS declined to comment on the ruling. Walker and Kineret Kallman didn't immediately respond to messages seeking comment. The broker has called the case 'factually baseless' in industry records, and when reached by Bloomberg earlier this year said the accusations are false. The drama, chronicled by Bloomberg in March, spotlights an issue that has long bedeviled US financial firms: messy fallout when brokers or investment advisers have personal relationships with clients. Despite high-profile legal brawls waged by wealthy families against firms including Morgan Stanley and JPMorgan Chase & Co., the industry's main regulators have no rule explicitly setting boundaries for ties outside the office. 'We are gratified that this case will be tried in an open courtroom and look forward to proving the allegations contained in our complaint,' Alan Futerfas, a lawyer for Kallman, said in a statement. More stories like this are available on
Mint
22-05-2025
- Business
- Mint
Singapore DPM Says Holding Geopolitical Neutrality Not Possible
(Bloomberg) -- Singapore's Deputy Prime Minister Gan Kim Yong said neutrality is not possible, highlighting the rising challenges for the city-state that has long sought to tread a diplomatic tightrope amid US-China trade tensions. 'If you try to be neutral and walk the middle road, the road is getting narrow and narrower, eventually you will be at a knife's edge and you won't be able to stand on it,' Gan said at a conference hosted by UBS Group AG in Singapore. 'The key is we have to take sides, we have to take position, we have to do so based on principles.' The city-state, he said, takes a approach based on its interests that the country has to do businesses with both the US and China, as well as other countries. A taskforce set up earlier this year that he chairs is to help the government and businesses cope with the situation, he said. 'We try to find a way that will be comfortable for both sides so that we can continue to do business with both sides,' Gan said. 'I must say that it's increasingly difficult and challenging.' The remarks come a day after Prime Minister Lawrence Wong announced a new cabinet in which Gan retained his position as deputy prime minister, as well as the trade minister portfolio. Wong has said the city will forge closer links with countries who share the same commitment to open and free trade. China has historically been the nation's biggest trading partner, while the US is the largest foreign investor and a critical military partner. Singapore's merchandise trade with China last year reached S$170.2 billion ($132 billion), the official data shows, the highest of any nation. That's compared with S$132 billion it did with the US. Separately, Singapore will keep manufacturing among its key sectors, and maintain its 20% contribution to the gross domestic product, Gan said Thursday. Semi-conductors, pharmaceuticals, and aerospace are among the businesses that the government encourages, Gan said. Financial services including wealth management remain another key sector to the economy, he said. Gan, who is also chairman of the Monetary Authority of Singapore, justified the central bank's position to maintain a strong local currency, which has appreciated more than 5% against the dollar this year. 'When we go overseas and find things are cheaper, never forget that this is because we have a strong Singapore dollar,' he said. --With assistance from Catherine Bosley. More stories like this are available on
Yahoo
22-05-2025
- Business
- Yahoo
'Addictive' Trump Tariffs Are 'Here To Stay' Even If Democrats Come Back To Power, Says Wharton Professor: 'The Truth Is Governments Need Revenues'
A professor from the Wharton Business School has suggested that tariffs implemented by President Donald Trump are likely to continue despite political opposition. What Happened: Professor Joao Gomes of the Wharton Business School, in a podcast, The Trade War Playbook: Tariffs, Uncertainty, and U.S. Economic Policy, stated that both Democrats and Republicans are likely to support tariffs due to their potential to generate revenue. 'I think the end game is some tariffs are here to stay,' Gomes said, adding that they are 'addictive for every country in the world.' He further suggested that the nature and extent of these tariffs are uncertain but they are 'definitely not a thing of the past.' Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — this is your last chance to become an investor for $0.80 per share. Nancy Pelosi Invested $5 Million In An AI Company Last Year — Here's How You Can Invest In Multiple Pre-IPO AI Startups With Just $1,000. "The truth is governments need revenues and once you see the amount of revenue the tariffs bring, I think Democrats will be addicted to them as Republicans—or are as likely to be," explained Professor Gomes. While the British government has secured a 'first mover' deal with the Trump administration, Gomes stated that the number of such deals to be made remains uncertain. Why It Matters: Analysts are now exploring the potential for targeted tariffs on particular industries or products. In a recent note, UBS Group AG indicated that such measures could be implemented as soon as this summer, following trade investigations into key sectors such as pharmaceuticals, critical minerals, lumber, copper, and semiconductors. Trump's steep tariffs on countries have received widespread criticism from Democrats and major economists. On Monday, JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon cautioned the market about displaying an 'extraordinary amount of complacency' amid the risks posed by tariffs, record U.S. deficits and geopolitical tensions. However, U.S. Treasury Secretary Scott Bessent dismissed concerns over the inflationary impact of tariffs on companies such as Walmart Inc. (NYSE:WMT). Meanwhile, former PIMCO CEO and current Allianz's chief economic adviser, Mohamed El-Erian, has suggested that the era of U.S. exceptionalism is on pause due to tariff wars and economic uncertainty, but it's not over. He believes it's too early to say if the damage inflicted is irreversible. Read Next: Hasbro, MGM, and Skechers trust this AI marketing firm — Invest before it's too late. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Many are rushing to grab 4,000 of its pre-IPO shares for just $0.30/share! Image via Shutterstock Send To MSN: Send to MSN UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? This article 'Addictive' Trump Tariffs Are 'Here To Stay' Even If Democrats Come Back To Power, Says Wharton Professor: 'The Truth Is Governments Need Revenues' originally appeared on Sign in to access your portfolio
Bloomberg
20-05-2025
- Business
- Bloomberg
Saudi Arabia's PIF to Shun Swiss Financial Markets After Credit Suisse
Two years after it was left nursing losses from the rapid collapse of Credit Suisse, the head of Saudi Arabia's Public Investment Fund said it will no longer invest in the country's financial markets. Middle Eastern investors were hit particularly hard by Switzerland's abrupt decision to bypass investor votes when UBS Group AG took over Credit Suisse in a government-backed rescue at a steep discount. At the time, Saudi National Bank — whose top shareholder is the PIF — held a stake of about 10% in Credit Suisse.
