LIVE MARKETS-Goldman's questions for European equities

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GOLDMAN'S QUESTIONS FOR EUROPEAN EQUITIES

If outlooks are passé - and normally wrong - another option for big research houses is to have a list of key questions, and Goldman have an interesting one out on Monday.

They have 10 questions for European equity markets in 2025, but we're only giving you half.

- Will the fall in the euro support stocks?

The euro has weakened sharply in recent months, and is set to continue doing so, but Goldman doubt it will help stocks.

It's true that more than half of earnings are generated outside Europe, but Goldman say "a fall in the euro tends to be associated with rising risks and or declining growth prospects, and it's this effect that dominates."

- Could fiscal policy from Germany be a support?

Yes. Some investors are hoping Germany will reform its rules around its debt limit. If did so, Goldman think beneficiary sectors would be defence, fiscal infrastructure and renewables.

- Are investors underpositioned?

Well, it depends who you mean. They note that foreign investors were modest buyers of European stocks in 2024, and it was domestic investors who were the sellers. "It is this that needs to change – rather than a rush of foreign buying."

- What about China?

China's economic weakness has hurt European stocks, and Goldman think the recently announced stimulus measures are not directed in ways that would help European companies. They are underweight luxury, autos and think steel demand from China will remain weak.

Will M&A pick up?

- Goldman thinks yes, given pent-up demand for deals, less blocking by regulators and a strong dollar.

As well as any companies bought at a hefty premium, that should be good news for banks.

(Alun John)

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