On August 24, the valuation of the European Stoxx 600 index relative to the S&P 500 index” data-wpil-keyword-link=”linked”>S&P 500 index has fallen to its lowest level since 2005, and compared with US stocks, the discount is more than 30%. While both the U.S. and Europe are affected by soaring inflation and hawkish central banks, Europe faces a myriad of other headwinds, including currency weakness, soaring electricity prices and political uncertainty in Italy and the U.K.
Mathieu Racheter, head of equity strategy at Julius Baer, said: “In European equities, we advise clients to focus on higher-income defensive sectors outside the euro zone, such as healthcare and consumer durables.”
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