Deutsche Bank downgrade Europe equities to neutral from overweight, stays fullyear bullish

<p>In a note on Monday Deutsche Bank downgraded European stocks to neutral.</p><p>DB are wary in the short term:</p><ul><li>"We expect markets to go mostly sideways with a mild setback of not more than 5% from current levels, predominantly in parts of the market that have seen the biggest inflows in the fourth quarter of last year,"</li></ul><p>And look for supportive central bank moves on the way, more than is expected:</p><ul><li>"We continue to believe that the ECB and the Fed will cut faster and further than the market is currently pricing in,"</li></ul><p>But, not yet!</p><ul><li>"However, we expect this to become apparent later this year, once central banks start to openly communicate planned cuts."</li></ul><p>Positioning is working against stocks:</p><ul><li>"Investor positioning in equities has increased substantially, and positive economic surprises have become fewer, especially in the U.S.," </li></ul><p>That mention of especially in the US lease wiggle room for Europe, though:</p><ul><li>DB remain bullish on European stocks throughout 2024, saying increased investor positioning does not appear to be in the overbought territory</li><li>a short-term pullback in European stocks seems likely</li><li>suggest corporate earnings may grow by 5% and price-to-earnings multiples may expand by 0.5 points due to potentially steady economic growth in China and a reacceleration of growth in the U.S. and Europe in the second half of 2024</li><li>implies an upside of around 8% for European stocks in 2024</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.