LIVE MARKETS-Will the "buy Europe" trade raise its head?

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WILL THE "BUY EUROPE" TRADE RAISE ITS HEAD?

Until last month European stocks appeared to be unstoppable with large fund inflows and many equity benchmarks extending their strong run to fresh record highs.

Then came Trump's tariff shock that erased trillions from global stocks and put a big question mark on the "buy Europe" trade, while pushing the STOXX 600 near bear market territory.

Things look much better today, after the surprise tariff reprieve, but concerns of an economic slowdown remain and the region-wide index .STOXX is still 12% below its peak.

So what are the prospects for European equities?

Alberto Tocchio, head of European equity and thematics at Kairos in Milan, says uncertainty remains but the indiscriminate selloff has created interesting opportunities in Europe.

"I believe that Europe may be the region with the most interest, as it's a market that's much cheaper than the American one, and Germany will have a massive and credible fiscal plan."

According to Tocchio, Germany's infrastructure plan offers an opportunity to invest in sectors with high visibility and defensive features, providing protection from tariff risks and an economic slowdown.

He said financials were also worth looking at, while on defence, he said the upside might be more limited given their stellar rally, although earnings visibility was very high there.

"Tariffs have caused a significant reset," he said, speaking with Reuters this week.

LFG+ZEST's chief investment officer Alberto Conca said the most compelling investment opportunities lie in the luxury and auto sectors in Europe, given cheap valuations.

He said Europe could keep outperforming Wall Street in the short term, although over the long run he favours the US market.

(Danilo Masoni)

EARLIER ON LIVE MARKETS:

MARKET WATCHERS MULL RALLY'S LONGEVITY CLICK HERE

EUPHORIC MARKETS CLICK HERE

BEFORE THE BELL: BOUNCING LIKE IN COVID TIMES CLICK HERE

SIGNS OF TROUBLE IN THE RELIEF RALLY CLICK HERE