While some companies are taking into account a cyclical recovery in their earnings expectations in 2024, Candrium believes that the economic data shows a mixed picture and therefore calls for caution.
Gandrium sees mixed sector performance across European equity markets. Information technology has seen strong gains in recent weeks due to investors’ move to companies involved in artificial intelligence. Additionally, industrials and financials also outperformed the European market overall.
In Europe, Gandrium focuses mainly on defensive growth sectors such as consumer products and healthcare. Also, the asset manager prioritizes retail banks with attractive value, while riskier investment banks are avoided. Gandrium remains negative about the European energy sector. The sector has not benefited from Saudi Arabia’s production cut of a million barrels of oil per day, and expects market demand to fall, Gantryum says.
Also see the Investing in America file
In the US, defensive sectors have underperformed the market in recent weeks, with consumer goods and utilities in particular losing significant ground. The energy sector was good.
According to Candrium, US stock markets could reach new highs for a number of reasons. First, the US is likely to experience a gradual but limited slowdown in growth. Second, recent economic indicators show that US inflation continues to move in the right direction. Third, Candriam doesn’t think U.S. stock markets are overpriced, especially as the analyst sees opportunities in the healthcare sector.