(Bloomberg) – European equities have outpaced growing concerns about stagflation, with tempting valuations hoping to ease Shanghai’s lockdown as well as China’s corporate crackdown.
The Stocks Europe 600 rose 0.7% at 8:02 a.m. in London. Mining has led to progress in the energy and travel and leisure sectors.
European stocks are under pressure this year amid concerns over the war in Ukraine, rising inflation and slowing growth. Investors are particularly concerned that financial tightening between rising commodity and living prices could push the major economies into recession.
Now, bargainers are picking up shares of the region through close-to-epidemic valuation transactions. Adding to the risky mood, Shanghai is temporarily unveiling a punitive lockdown, while Chinese technology stocks have jumped on hopes that a meeting between the country’s top regulators and corporate giants will bring Beijing back to its year-long industry clampdown.
“Overall sentiment is bad but it is improving,” said Mehvish Ayub, a senior strategist at State Street Global Advisors, adding that the firm has moved from a low-weight position to a neutral position in European equities. In an interview with Bloomberg Television, he said that “there are many reasons why we should still hold equity at this level”, including strong earnings and the possibility of further rise from current levels.
The Goldman Sachs team cut short-term stock outlook into strong feelings
Meanwhile, strategists at Goldman Sachs Group Inc., including Christian Mueller-Glissmann, have weighed on global equities in a three-month outlook, leaving extra weight on the one-year horizon. “The market picture has moved toward stagnation with rising and sticky inflation and negative growth,” they wrote in a note.
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