LIVE MARKETS-Pictet goes overweight European stocks, downgrades US

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PICTET GOES OVERWEIGHT EUROPEAN STOCKS, DOWNGRADES U.S.

Strategists at Pictet Asset Management have upgraded European equities to overweight on signs of an improving European economy, increased political stability and brighter prospects for corporate profits.

Pictet AM, which had 223 billion pounds in assets under management as of June 30, also downgraded U.S. stocks to neutral, saying company earnings are no longer providing a counterbalance to "lofty" valuations.

"It's all change in global equity markets in 2025," Pictet said.

"Last year's laggards are coming out of the shadows, while recent stars are falling prey to profit taking."

European shares have outperformed their U.S. peers this year, with the benchmark STOXX 600 .STOXX up 8.5% in 2025, compared to a 3% drop for the S&P 500 .SPX.

Pictet has also shifted its stance on euro zone sovereign debt to underweight from neutral, citing Germany's debt brake reform that looks set to pave the way for a pick-up in the supply of Bunds.

The asset manager has also upgraded U.S. government bonds on signs that U.S. growth is slowing and as the Federal Reserve puts the breaks on its quantitative tightening programme, the process through which it reduces its Treasury holdings.

(Samuel Indyk)

EARLIER ON LIVE MARKETS:

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