Europe
A record breaking month in November saw $1.7 trillion added to European equities. Many strategists see this as just the start. Goldman Sachs, JPMorgan, Citigroup, Credit Suisse, Bank of America, or BNP Paribas all expect more outperformance from value stocks in the coming months.
The Stoxx Europe 600 Index has surged nearly 15% in Novembervalue and cyclical sectors like banks, insurance, and auto shares are driving prices higher.The biggest sectors showing recoveries are airlines, energy, and banks. Airlines making around a 43% gain, energy 35% and banks 34%.
The twin good news of a Biden Presidency and COVID-19 vaccines are helping the industries that suffered the most during the pandemic. The previously unloved value stocks out of Europe have strongly helped European equities.
This does make for a buy on the dips scenario for European indices. Looking at EuroStoxx a return to the broken trend line would be a decent value area to enter looking ahead to 2021. The main risks to this outlook would be if we see a strong return of the virus resulting in extra lockdowns in Europe. However, given that a vaccine roll out looks pretty imminent it is not unreasonable to assume that any retracements are short lived.
