(Bloomberg) – European equities have outperformed previous gains as tempting valuations have failed to overcome concerns over tighter policies and slower growth.
The Stoxx 600 was up 0.2% at 10:17 a.m. in London, with stocks of basic resources and energy gaining ground, while shares of automotive and consumer goods declined.
The benchmark cut 1.3% in advance after European Central Bank President Christine Lagarde said regulators would begin raising interest rates in July and exit the sub-zero territory by the end of September, raising fears that central banks could hurt the economy. When it comes to fighting rising prices.
European stocks have come under pressure this year amid concerns over hackish central banks, slowing growth, rising prices and the war in Ukraine. Following the dip, the 12-month forward price-to-earnings ratio of the benchmark Stoxx 600 is the lowest since March 2020.
Paul Donovan, chief economist at UBS Global Wealth Management, said, “Central bankers seem to be fairly sure about the near-term policy guidance, but the markets seem to be too bad to hear or understand them.”
Meanwhile, Ulrich Urban, head of Berenberg’s Multi-Asset Strategy and Research, said there could be a short-term relief rally due to bearish sentiment and location. There should also be some support for equities from share buybacks and fund rebalancing, he said.
Among individual movers, Kingfisher Plc will buy back 300 million pounds ($ 377 million) of stock and that revenue rose 4.9% after being said to be above pre-epidemic levels. Meanwhile, Mediobanka SPA fell after UBS Group neutralized its recommendation on AG stocks due to limited uptrend for Italian lender stocks.
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