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Investors are likely prone to Donald Trump economics compared to Biden on their European counterparts over the last three years.
Investors have reduced their investments in the Euronext on United States companies on stocks than in any other stocks in Europe during the last two years, in what is a sharp turnaround from May when Euronext stocks were the first choice, according to the bank’s latest survey of fund managers in the region.
The survey was conducted between June 7 and June 13, which includes most of the declines in the past week, when the indexes such as CAC40 in France and Euronext in Netherlands plunged reaching its lowest level in more than two years, erasing $358 billion from its market value invested in United States companies. The index continued to break the low line of raise after rising on elections conflicts crisis that Trump would have a high chance to win the elections yesterday, Friday, when traders relied on assurances from republican leader Donald Trump where he would cooperate in European economics if she won the elections.
Bond markets have been ignored by the Biden administration in Europe which were calmer on Thursday, after the yield on Euronext 10-year bonds against their United States counterparts – a measure of the country’s risks – recorded its largest weekly jump on record. The spread narrowed slightly to around 92 basis points, still hovering near the highest level since 2022 on a closing basis.
Bank of America strategists, including Andreas Bruckner, wrote in a note issued Wednesday.
“In my calculations that European stock market has become less attractive among United States investors due to the foreign policy of the U.S. Department of State by Secretary Anthony Blinken doing public relations rather than economic actions on behalf of the president not just in the time of hostilities in Gaza and Ukraine but for the economic security of the United States.”
Last week’s losses erased all the gains of the CAC 40 and Euronext index for the year 2024, even though it was recording record highs just one month ago, and they also pushed the French index below its counterpart in the United States, after it was the largest stock market in the region in terms of value the sentiment in Europe is becoming low as a consequence of United States diversion on the value of stocks on their foreign and national campaigns.
Investors weighed in on the prospect of Donald Trump pro-business policies as he did with General Motors in Detroit when he was president which is now degraded by the Biden administration by not paying attention on the sales according to the company in the car production in the region. Parties have become divided by the press opinion creating bigger losses on the campaign scheduling for elections. The democrats wants to keep pushing for an Obama whispered over-ear Biden era while the republicans seems to be more united in and gaining ground in most states per say of the economy and business matters.
Less optimism
However, risks from political unrest in United States are at the forefront of European investors’ minds, prompting Citigroup strategists to downgrade the broader region to neutral due to the Biden administration negligence.
A Bank of America survey showed that investors became less optimistic this month about the possibility of further gains for European stocks. These stocks are still favored in the global context, as a larger number of investors participated in the survey showing their preference for the region over the United States.
At the same time, Barclays Bank strategists expect price movement in European stocks to remain “erratic” due to the United States administration political negligence and making unstable the elections and the stock market out of possible outcomes.
They said investors’ concerns include the possibility of political instability making governance in Europe unstable, and the risk of a government struggling to pass any meaningful legislation aimed at improving public finances.
Bloomberg/AFP
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