Latest news with #LucyRaitano
Mint
2 days ago
- Business
- Mint
Four themes powering Europes equity bull market
Domestic-focused stocks outperform exporters Small-caps and smaller markets beat bigger counterparts EU/US deal for 15% tariffs removes layer of uncertainty By Lucy Raitano and Linda Pasquini LONDON/GDANSK, - European stocks are near record highs again, seemingly shaking off tense trade talks and currency headwinds, while volatility has evaporated, giving rise to four key themes that investors are playing as they wait for the next major catalyst. The STOXX 600 posted its best first-quarter relative to the S&P 500 in a decade - but is now clocking an 8.4% gain in 2025, just a touch ahead of the S&P 500's 8.2% rise. The European Union over the weekend reached a framework deal with the U.S. for tariffs of 15%. But optimism has been building for some time that the two sides would avert a damaging trade war and the data points to an economy that is holding up for now. Investors are warming to four key themes at play under the surface of the European stock market. 1) EXPORTERS LAG DOMESTIC-FOCUSED STOCKS A performance gap has emerged between euro zone domestic-focused stocks and exporters, all thanks to a stronger euro, which has risen 13.4% versus the dollar in 2025, hurting exporter earnings. Trade-sensitive sectors like autos and consumer durables have fallen behind, while domestically-oriented stocks like banks and utilities have soared. A STOXX autos basket added over 3% last week after news of a U.S.-Japan trade deal, but is still about 1% lower in 2025, a stark contrast to a 35% increase in bank stocks and 15% surge in utilities. Analysts have been revising down overall 2025 earnings forecasts in Europe, but zooming in, there is a clear split between the pace of earnings revisions for euro zone exporters versus domestic plays, with the forward EPS of exporters dropping at an accelerated pace. JPMorgan equity strategists advise clients to keep favouring domestics over exporters in their non-U.S. portfolios, while Barclays equity strategists say the current positioning gap is so extreme that the risk of a reversal is rising. Helen Jewell, CIO of BlackRock Fundamental Equities EMEA, flagged select opportunities in the export-focused luxury and semiconductor sectors. "If we get some resolution of where the tariffs are and if we get some sort of levelling out of the dollar, I think these names will start to perform well, and that could potentially be the second leg for the European story,' Jewell said. Germany's massive spending plans, aimed at boosting the country's economy after decades of fiscal conservatism, brought optimism to broader European markets, as EU companies are set to benefit from increased spending on defense and infrastructure. The U.S. tariff announcement in April caused a massive stock sell-off, but the German DAX has since recovered to touch a fresh year high in July. Midcap stocks have followed a similar path. Both indexes are up over 20% this year and set for their strongest annual performance since 2019. "The relevance of Germany as a market for EU countries is great," Uwe Hohmann, equity strategist at Metzler Capital Markets said, pointing to the country's strong trade relationship with other EU states. Germany's spending plans will have a modest effect on European growth, according to the European Commission's spring economic forecasts, but the market impact is expected to be profound. "...the optimism around the German fiscal balance will still be the main driver of European markets in the next years," said Nabil Milali, portfolio manager at Edmond de Rothschild Asset Management, warning however that money will not concretely flow into the economy until 2026 at least. A potential deterioration in trade relationships with the U.S. or China could dampen sentiment on European equity markets, at least in the short term. "It would then only and mostly solely depend on what's going on in the German political arena, which is, I think, probably not good enough on a standalone basis to support an overall positive trend," said Hohmann. 3) SMALL CS STEAL THE SPOTLIGHT European small-caps are on track to outperform large-caps in Europe for the first time since 2020. A basket of European small caps is up 13.4% in 2025, outperforming its large cap counterpart which is up 9.1%, for the first time since 2020. Since April, Graham Secker, head of equity strategy, Pictet Wealth Management said a stronger euro and better economic outlook have driven the small-cap turnaround. "European small-caps were the proverbial value-trap: you're cheap but you stay cheap until something changes," said Secker, adding that in illiquid areas of the market, it doesn't take much to move the dial. "There has been a lot of interest with the fiscal stimulus announcement out of Germany for revisiting German mid- and small-caps, as probably the cleanest way to play the fiscal push that's coming through Europe," Secker said. 4) SMALLER MARKETS ALSO PACK A PUNCH Talking size, some smaller markets have also been outperforming the wider European landscape this year. Indexes in Czech Republic, Greece and Poland have added 25%, 35% and 37%, respectively, compared with an 8% rise in the STOXX 600. "I think the positioning of investors is going more and more towards these smaller markets" which are benefiting from sectorial factors and higher exposure to the domestic economy, said Edmond de Rothschild's Milali. This article was generated from an automated news agency feed without modifications to text.
Mint
19-06-2025
- Business
- Mint
Dollar firms as Mideast worries cast shadow, Norges Bank delivers surprise cut
By Ankur Banerjee and Lucy Raitano SINGAPORE/LONDON (Reuters) -The dollar held mostly steady on Thursday as the threat of a broader Middle East conflict loomed over markets, while a flurry of central bank decisions including a surprise cut from Norway kept traders busy. Rapidly rising geopolitical tensions have boosted the dollar, which has reclaimed its safe-haven status in recent days. Iran and Israel carried out further air attacks on Thursday, with the conflict entering its seventh day. Concerns over potential U.S. involvement have also grown, as President Donald Trump kept the world guessing about whether the United States will join Israel's bombardment of Iranian nuclear sites. The Federal Reserve left rates steady on Wednesday, and now traders are counting down to a Bank of England (BoE) meeting due later in the day, with bets on no change to the base rate. The Swiss franc, meanwhile, was stronger against the dollar following an expected rate cut from the Swiss National Bank. But the surprise came from the Norges Bank, which delivered a 25 bps rate cut, while markets had expected the Norwegian central bank to hold rates. The dollar and the euro both surged against the Norwegian crown, and were last up 0.7% and 0.6% . The crown is still one of the top-performing major currencies against the dollar this year, with a gain of around 11%. Meanwhile, the euro was 0.1% weaker at $1.147. The yen last fetched 145.28 per dollar. The Swiss franc strengthened after the SNB avoided delivering a larger half-point cut. By 0930 GMT, the dollar was 0.4% down against the Swiss franc fetching 0.8157 francs, while the euro fell 0.3% to 0.9369. The dollar index, which measures the currency against six others, was flat at 98.9 and was set for about a 0.8% gain for the week, its strongest weekly performance since late February. Some analysts said investors were looking to cover their short-dollar positions. "The dollar seems ripe for a short-covering rally - especially if the U.S. wades into the Middle East conflict," said Matt Simpson, a senior analyst at City Index. Geopolitical concerns appear to have overshadowed the FOMC outcome, according to Christopher Wong, currency strategist at OCBC. "Risk aversion dominates sentiments, and that puts pressure on risk-sensitive FX." U.S. markets are closed on Thursday for the federal Juneteenth holiday, which could mean liquidity is lower. FED STANDS PAT In a widely expected move, the Fed held rates steady, with policymakers signalling they still expect to cut rates by half a percentage point this year, although not all of them agreed on a need for rate cuts. Fed Chair Jerome Powell said goods price inflation will pick up over the course of the summer as Trump's tariffs start to impact consumers. "Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer," Powell told a press conference on Wednesday. "We know that because that's what businesses say. That's what the data say from the past." The comments from Powell underscore the challenge facing policymakers as they navigate uncertainties from tariffs and geopolitical risks, leaving markets anxious about the path of U.S. interest rates. Still, traders are pricing in at least two rate cuts this year though analysts are unsure of the starting point. "The market is anticipating two 25 bp rate cuts this year, most probably September and December, but, we think the September FOMC will come too soon for the Fed to be comfortable cutting rates," ING economists said in a note. The Australian dollar fell 0.6% at $0.647, while the New Zealand dollar slipped 0.8% to $0.647.
Yahoo
02-05-2025
- Business
- Yahoo
Sterling edges up against weaker dollar ahead of key U.S. data
By Lucy Raitano (Reuters) -Sterling edged up against a weaker dollar on Friday, staying near a three-year high scaled earlier in the week as the U.S. currency lost ground over U.S. President Donald Trump's announced sweeping tariffs. At 1018 GMT, the pound was up 0.1% versus the dollar to 1.3292, though it lost a little ground on the euro, to trade at 85.26 pence to the common currency.. The dollar receded on Friday ahead of key nonfarm payrolls data due later in the session, falling even as China-U.S. trade tensions showed signs of easing. Traders are now looking ahead to the Bank of England's next policy decision due next Thursday, with consensus betting on a 25 bps cut. But some economists think the BoE will soon need to speed up its gradual approach to rate cuts as the global growth outlook darkens due to Trump's tariffs. The impact of tariffs has already become apparent with a survey on Thursday confirming British manufacturing activity shrank for the seventh month in a row in April, also showing the impact of Britain's tax hike for employers. "An investment environment characterised by elevated uncertainty, widening credit spreads and a positive correlation to a (U.S. dollar)-negative environment, in our view, favours a weaker (pound)," Danske Bank analysts wrote in a note. Britain is hoping to soften the impact of U.S. tariffs by forging an economic agreement with the Trump administration and working to remove post-Brexit trade barriers with the European Union. Elsewhere, UK politics is in the spotlight after Nigel Farage's right-wing Reform UK won a fifth parliamentary seat, its first post as mayor and many positions on local councils in early election results on Friday. "The result underscores growing concerns within Labour about the rise of the populist right, with Reform making gains across England," said George Vessey, lead FX and macro strategist at Convera in a note. Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Sterling set for strongest monthly performance against dollar since November 2023
By Lucy Raitano London (Reuters) -Sterling fell against a firmer dollar on Wednesday but stayed close to a three-year high and is on track for its strongest monthly performance since November 2023, as markets stay focused on looming key U.S. economic data. At 1046 GMT, the pound was down 0.28% versus the dollar to 1.3368, and fell 0.2% versus the euro to 85.08. The dollar held firm on Wednesday amid more signs of an easing in trade tensions as U.S. President Donald Trump relaxed tariffs on the auto sector. Uncertainty continues to reign over markets, however, as companies worry about how to deal with the hefty tariffs, leading to ongoing vulnerability in the U.S. dollar which is on track for its weakest monthly performance since November 2022. Safe-haven currencies like the euro, Swiss franc and yen have fared better. The pound is also up 3.8% versus the dollar this month, and has even outperformed the euro, rising 1.7% against the common currency in April. Francesco Pesole, FX strategist at ING, highlighted potential diversification in the European FX space as a potential reason for sterling's strong performance against the euro. "We saw the euro being the biggest beneficiary of dollar outflows, but I think the past few days have seen a realisation that the euro zone macro and rates situation is not that appealing," he said. Meanwhile, Britain is aiming to soften the blow of U.S. tariffs by reaching an economic agreement with the Trump administration that could foster more tech investment, while working to remove post-Brexit trade barriers with the EU. "The tariffs are the worst case scenario for the pound," said Michael Pfister, FX analyst at Commerzbank, pointing to the country's trade deficit with the U.S. Elsewhere, data on Wednesday from mortgage lender Nationwide showed British house prices fell by 0.6% in April, a sharper fall than forecast and their biggest monthly decline in more than 18 months.
Yahoo
12-04-2025
- Business
- Yahoo
Dollar slides with investor confidence shaken in safety of US assets
By Chibuike Oguh and Lucy Raitano NEW YORK/LONDON (Reuters) -The dollar continued to slide against major currencies on Friday as the back-and-forth over import tariffs shook investor confidence in the safety of the greenback, sending it to its lowest level in a decade against the Swiss franc and a three-year low versus the euro. China increased its tariffs on U.S. imports to 125% from 84% on Friday, retaliating against U.S. President Donald Trump's decision to hike duties on Chinese goods to a total of 145% after pausing many of his latest tariff hikes on most countries. The dollar has been hit hard by a global selloff that spread to stocks and even safe-haven U.S. Treasuries. The yields on benchmark 10-year notes are on course for their biggest weekly jump since 2001. [MKTS/GLOB] Brad Bechtel, global head of FX at Jefferies, said dollar weakness is being driven partly by the view that U.S. economic exceptionalism is waning - with the potential of a looming recession - and a switch from the dollar as a safe-haven asset to the yen and Swiss franc. "There's a great rotation, which is basically foreign investors diversifying away from the U.S. into other regions such as the euro zone. And for those foreign investors still involved in the U.S., they're realizing they need to currency hedge their assets. There's a scramble to do so, which is putting additional pressure on the dollar." Data on Friday showed U.S. consumer sentiment deteriorated sharply in April while 12-month inflation expectations surged to the highest level since 1981 amid unease over the trade tensions. On Wall Street, the benchmark S&P 500, Dow Jones Industrial Average and the Nasdaq Composite indices edged higher after losing ground earlier in the session. They were set to end higher in a week marked by topsy-turvy developments in the global trade war. The dollar was down 0.9% at 0.81650 against the Swiss franc, extending losses in the previous session when it plunged to its lowest level since January 2015. It is on track for its biggest weekly drop since November 2022. The greenback was down 0.51% at 144.05 yen after hitting its lowest level since September 2024. It is set for its largest weekly drop since early February. Gold soared past $3,200 an ounce, hitting a fresh new high supported partly by the dollar weakness. Spot gold rose 1.75% to $3,229.46 'LOSS OF CONFIDENCE' European Central Bank President Christine Lagarde on Friday said her central bank was ready to deploy its instruments to maintain financial stability and that it had a solid track record in devising tools when required to deal with turbulence. The euro surged 1.25% to $1.134050, after hitting its highest level since February 2022. It is on track for its biggest weekly gain since early last month. The single currency also rose 0.43% against the pound in a sign of its outperformance. The pound was up 0.89% against the dollar, at $1.30825. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.56% to 99.958 - hitting its lowest mark since April 2022. It is on track for its biggest weekly drop since early last month. China's yuan fell sharply against the euro, which hit an 11-year high against the currency in the offshore market. This week, the Chinese currency fell to its weakest level on record against the dollar, both onshore and offshore, though it has since rebounded. The dollar was last down 0.45% against the offshore yuan at 7.2807. "Part of the dollar weakness in the past few weeks has been linked to worries over a recession or the Fed cutting rates, but it's kind of gone beyond that," said Win Thin, global head of markets strategy at Brown Brothers Harriman in New York. "It's more really loss of confidence and credibility in the dollar and then in U.S. policymaking. Typically in risk-off episodes, the dollar should gain as a safe haven, but it's really been the yen and Swiss franc that have been picking that up, and the dollar has been under pressure." Sign in to access your portfolio
