HSBC has released its updated outlook for European stocks in the second half of 2024, highlighting the importance of earnings growth to maintain positive price momentum amidst mixed economic data.The forecast suggests that interest rates will likely fall in H2 2024, but the motivation behind these rate cuts could significantly influence market returns.
They note that valuations in the European market have sharply re-rated, posting a 26% return against earnings growth of just 5.1% this year. In terms of sector preferences, HSBC maintains a mix of cyclical and defensive sectors as overweight, with Healthcare and Industrials being the top picks due to their high growth potential and supportive characteristics in a falling interest rate environment.
In conclusion, while HSBC sees some potential for market performance, it emphasizes that improved earnings growth is crucial for sustaining the current momentum in European equities.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.