Investing.com -- BofA Securities has adjusted its outlook for European equities, downgrading German stocks to"underweight" while lifting its stance on UK equities to"marketweight."
German equities have outperformed their European counterparts by 12% since June, buoyed by strong performance in sectors such as software, capital goods, and insurance. Analysts are also cautious about the sectors driving the recent rally, as these may not sustain momentum under tightening conditions.
Additionally, analysts project continued upside for UK domestically focused companies, driven by fiscal easing and stronger domestic growth prospects. The shift implies limited further downside for theElsewhere in Europe, BofA maintains a cautious view on other markets. Italy and Spain remain under"underweight" ratings, reflecting concerns over their heavy reliance on banks and value sectors, which are expected to underperform as bond yields decline and risk premiums widen.