From Morningstar: 2025-04-01 08:19:00

European equity markets have outperformed rivals in 2025, sparking interest in where they go next. Two potential drivers are valuation and momentum. Q4 2024 saw Europe trading at a 5% discount to fair value estimates, but now it’s closer to fair value. Macroeconomic conditions have improved, with inflation at 2.2% and interest rate cuts forecasted.

The recent German infrastructure package and improving economic prospects make European equities more appealing. Inflation sits at 2.2%, interest rates are at 2.5%, and GDP growth forecasts for 2025 are positive. The German bill could lead to an extra EUR 500 billion in spending, benefiting Europe’s economy.

European stock sectors to watch in Q2 include defense, automotive, consumer, and utilities. The defense sector is expected to see continued growth, while the automotive sector could benefit from infrastructure changes. Consumer sector sub-sectors like brewers and distillers offer attractive valuations, and utilities may see improvements in regulatory environments.

Expect more stock market volatility in Q2 due to ongoing risks like US trade war tensions. Investors should prepare for potential fluctuations in the market. The authors do not own shares in any securities mentioned in the article. 1. The unemployment rate in the United States has dropped to 4.2%, the lowest it has been since the start of the pandemic. This marks a significant improvement in the job market as businesses continue to recover from the economic impact of COVID-19.

2. A new study has found that eating a diet rich in fruits and vegetables can reduce the risk of heart disease by 20%. Researchers analyzed data from over 100,000 participants and found a clear correlation between a plant-based diet and improved heart health.

3. The United Nations reported that global carbon emissions have reached a record high in 2021, despite efforts to reduce greenhouse gas emissions. The report highlights the urgent need for countries to take immediate action to curb carbon emissions and address the growing threat of climate change.



Read more at Morningstar: European Stock Market Outlook: Where We See…