Why do European stocks underperform? (2024)

Why do European stocks underperform?

Value versus momentum

Why have European stocks underperformed?

“Europe is certainly more attractive,” said Robert Almeida, global investment strategist at MFS. “One reason earnings were lower in Europe is because they're more economically sensitive. That's why the stocks didn't do as well. Now, there's less earnings risk than in the US and less valuation risk, too.”

Is it a good time to invest in European stocks?

The European economy has its problems, but with interest rates set to fall and equities looking good value, this could be a chance for growth stock-pickers to 'buy the dip'. Markets in the last couple of years have been very much macro driven. We believe 2024 may be different.

Is it better to invest in Europe or USA?

European stocks are cheap compared with the U.S., especially U.K. stocks. Even adjusting for the fact the U.S. indexes put more weight on big, expensive technology companies and Europe on cheap banks, Europe is still much cheaper.

Are European equities undervalued?

European stocks remain favorably priced versus international stocks, most obviously versus the United States, where the 13.8x earnings for the MSCI Europe Index compares to a 21.1x multiple for the S&P 500 Index, a near-30-year relative low.

Do international stocks outperform US stocks?

Think long term. 2024 may be a good time to look for bargains in international stocks that have the long-term potential to deliver higher returns than US stocks. Fidelity's Asset Allocation Research Team (AART) forecasts that international stocks will outperform US stocks over the next 20 years.

Have international stocks ever outperformed US stocks?

Despite lagging in recent years, when you look historically: in the last 50 years, international stocks outperformed U.S. stocks in over 40% of all 10-year rolling time periods.

What is the outlook for European equities in 2024?

Fund managers and equity strategists surveyed Feb. 9-21 expect the pan-European benchmark STOXX 600 (. STOXX) , opens new tab index to reach 510 by year-end, surpassing 500 for the first time. It would imply a 3.7% increase from Tuesday's close of 491.90 and a 6.5% gain for 2024.

What is the best European stock to buy in 2024?

What is the equity outlook for Europe in 2024?

According to our latest European Private Equity Outlook, 65% of industry experts anticipate an increase in M&A transactions with private equity (PE) involvement in 2024. "We see a significant change in sentiment compared to 2023 with anticipated higher volumes of M&A transactions involving private equity."

Which country is most attractive for investment?

Will international stocks outperform in 2024?

In essence, the U.S. has not been as expensive as perceived, and the rest of the world has not been as cheap. That may be the case again in 2024. Therefore, a strategy that includes U.S. and international stocks may continue to outperform one that excludes U.S. equities, even though non-U.S. markets appear cheaper.

Is the U.S. richer than all of Europe?

In terms of good old per capita GDP, it's not much of a contest: Switzerland has higher per capita income than the U.S., but the U.S. comes out ahead of the Northern European countries — Sweden, Germany, Denmark, and the Netherlands — and well ahead of other European countries like France.

What is the most undervalued stock?

What is Europe's most valued stock market?

The LSE is the most-valued stock exchange in Europe as of 2023. According to the 2020 Office for National Statistics report, approximately 12% of UK-resident individuals reported having investments in stocks and shares.

Why are European stocks at all time highs?

High valuations for Europe's top performers are “partly justified by superior earnings growth, a strong balance sheet and a sustainable competitive advantage,” he said. Confidence in luxury stocks is also returning, with resilient sales at LVMH driving broader gains.

Why are international stocks doing so poorly?

This has been influenced by the uncertain economic and political environment during the COVID-19 pandemic, where investors have paid a premium for the lower volatility and more stable, predictable returns offered by U.S. equities.

Is 40% international stock too much?

Before choosing the best foreign stocks, funds or ETFs to invest in, you need to decide how much of your overall equity portfolio to allocate overseas. Since US stocks account for about 60% of all world equity, some advisers recommend stashing 40% of your portfolio in foreign stocks.

Why does a strong dollar hurt international stocks?

That is because when the dollar is strong, foreign sales will convert into fewer dollars and thereby lower profits, and that often leads to falling stock prices, and vice versa.

Should I keep investing in international stocks?

Markets outside the United States don't always rise and fall at the same time as the domestic market, so owning pieces of both international and domestic securities can level out some of the volatility in your portfolio. This can spread out your portfolio's risk more than if you owned just domestic securities.

Is a strong dollar bad for international stocks?

Key Takeaways

A strengthening dollar means U.S. consumers benefit from cheaper imports and less expensive foreign travel. U.S. companies that export or rely on global markets for the bulk of their sales are financially hurt when the dollar strengthens.

Is it good to have international stocks in your portfolio?

International stocks have two main advantages: diversification and the potential to perform better than U.S. stocks over certain periods. In the past, non-U.S. stocks have had relatively low correlations with their U.S. stock counterparts, leading to better risk-adjusted returns for a globally diversified portfolio.

Is Europe going into a recession 2024?

After narrowly avoiding a technical recession in the second half of last year, prospects for the EU economy in the first quarter of 2024 remain weak. However, economic activity is still expected to accelerate gradually this year.

What is the stock market expected to do in 2024?

As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.

Will market improve in 2024?

Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.