LIVE MARKETS-European Equities: opportunity amid low expectations

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

EUROPEAN EQUITIES: OPPORTUNITY AMID LOW EXPECTATIONS

European equities could continue to benefit from a climate of subdued investor sentiment, according to Invesco's equities team.

Last year, pessimism driven by German political uncertainty created a low bar for success, but, since then, returns have been notably strong, supported by greater defence spending, especially in dollar terms.

Today, concerns have shifted to French politics and Germany’s delayed fiscal spending. Yet, this environment of caution could again prove fertile ground for opportunity.

"Whilst we’re not claiming there is a magic wand for France, we believe news flow has the potential to positively surprise the low expectations", says Invesco's Oliver Collin, Co-Head of UK and European Equities says.

Germany’s budget law, passed in September, paves the way for infrastructure investment from late 2025, while tariff risks are easing, these factors support improving GDP and earnings growth, he adds.

Similarly, in Britain, pessimism could lay the groundwork for improvements, says Martin Walker, Co-Head of UK and European Equities at Invesco.

UK equities have shown resilience in 2025, despite persistent concerns about inflation, sluggish growth, and strained government finances.

Walker thinks this backdrop has left investors cautious, with risk premiums elevated and sentiment focused on potential downside.

"Not all is bad, however," says Walker. "Lower rates could certainly help, encouraging reluctant households to start spending again".

He sees opportunities in utilities, internationally orientated consumer staples and domestic UK banks.

(Joice Alves)

EARLIER ON LIVE MARKETS:

HOW INSTITUTIONAL INVESTORS REACTED TO US SHUTDOWN - SURVEY CLICK HERE

STOXX EDGES UP CLICK HERE

BEFORE THE BELL: EUROPE RESILIENT, AI PLAYS TREMBLE CLICK HERE

ORACLE BRINGS REALITY CHECK AFTER FED-INSPIRED RALLY CLICK HERE