Euro Area Stocks Outperformance Coming to an End
The outperformance of Euro area stocks is coming to an end, according to JPMorgan Asset Management’s head of European equity strategy, Jiri Matejka.
The European Market
The European market has been outperforming the U.S. market for the past two years. This is due to the fact that the European Central Bank (ECB) has been more aggressive in its monetary policy than the Federal Reserve. The ECB has been providing more stimulus to the European economy than the Fed has been providing to the U.S. economy. This has resulted in a stronger euro and higher stock prices in the Euro area.
JPMorgan’s View
However, according to Matejka, this outperformance is coming to an end. He believes that the ECB will soon start to reduce its stimulus, which will lead to a weaker euro and lower stock prices in the Euro area. He also believes that the U.S. market will start to outperform the European market as the Fed begins to increase its stimulus.
The Impact of the U.S. Stimulus
The U.S. stimulus package is expected to be much larger than the ECB’s stimulus package. This will lead to a stronger U.S. dollar and higher stock prices in the U.S. market. This will likely result in the U.S. market outperforming the European market.
The Impact of the ECB Stimulus
The ECB’s stimulus package is expected to be much smaller than the U.S. stimulus package. This will lead to a weaker euro and lower stock prices in the Euro area. This will likely result in the U.S. market outperforming the European market.
The Impact of Interest Rates
The ECB is expected to start raising interest rates in the near future. This will lead to a stronger euro and higher stock prices in the Euro area. However, the Fed is expected to keep interest rates low for the foreseeable future. This will lead to a weaker U.S. dollar and lower stock prices in the U.S. market.
The Impact of Inflation
The ECB is expected to start raising inflation in the near future. This will lead to a stronger euro and higher stock prices in the Euro area. However, the Fed is expected to keep inflation low for the foreseeable future. This will lead to a weaker U.S. dollar and lower stock prices in the U.S. market.
The Impact of Valuations
The valuations of European stocks are currently higher than the valuations of U.S. stocks. This is due to the fact that the European market has been outperforming the U.S. market for the past two years. However, Matejka believes that this outperformance is coming to an end and that the U.S. market will start to outperform the European market.
The Impact of Politics
The political situation in Europe is uncertain. This could lead to volatility in the European markets. However, the political situation in the U.S. is more stable. This could lead to less volatility in the U.S. markets.
The Impact of Trade
The trade situation between the U.S. and Europe is uncertain. This could lead to volatility in the European markets. However, the trade situation between the U.S. and China is more stable. This could lead to less volatility in the U.S. markets.
The Impact of Technology
The technology sector is a major driver of growth in both the U.S. and European markets. However, the U.S. technology sector is more advanced than the European technology sector. This could lead to higher stock prices in the U.S. market.
Conclusion
JPMorgan Asset Management’s head of European equity strategy, Jiri Matejka, believes that the outperformance of Euro area stocks is coming to an end. This is due to the fact that the ECB is expected to reduce its stimulus, while the Fed is expected to increase its stimulus. This will lead to a weaker euro and lower stock prices in the Euro area, while the U.S. market will start to outperform the European market. In addition, the valuations of European stocks are currently higher than the valuations of U.S. stocks, and the political and trade situations in Europe are uncertain. All of these factors could lead to the U.S. market outperforming the European market.