LIVE MARKETS-Three catalysts to support Europe's re-rating

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THREE CATALYSTS TO SUPPORT EUROPE'S RE-RATING

Europe's STOXX 600 .STOXX hit another new intraday record on Tuesday, taking its year-to-date gain to 5% and extending its recent outperformance versus U.S. markets.

The U.S. benchmark S&P 500 .SPX is up just 2.2% this year and the Nasdaq 100 .NDX is up 0.5% after Monday's 3% slide.

But the recent outperformance of European stocks comes after two years of U.S. exceptionalism, driven by surging market values of stocks linked to AI.

We don't need to go into detail about the impact DeepSeek is having on the sector and U.S. markets (others have done that here and here). But what other factors could help Europe catch up with the U.S.?

Man Group's Nick Wilcox and Chris Litchfield believe there are three catalysts that could support a re-rating, even if the challenges facing Europe remain significant:

- Political stabilisation

- Supportive monetary policy

- China's recovery

"While the challenges facing Europe are far from resolved, the asymmetry of the opportunity is compelling," Wilcox and Litchfield say.

"With sentiment still near historic lows, even incremental improvements – whether political, fiscal, or company-specific – could drive a meaningful re-rating of the region."

(Samuel Indyk)

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TUESDAY'S OTHER LIVE MARKETS POSTS:

STOXX 600 RISES AS INVESTORS EVALUATE DEEPSEEK IMPACT CLICK HERE

EUROPE BEFORE THE BELL: FUTURES MOSTLY HIGHER AFTER DEEPSEEK WOBBLE CLICK HERE

US EXCEPTIONALISM HAS A FLIPSIDE CLICK HERE