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European financial markets face a difficult outlook heading into 2024. Fears over US tariffs and political tensions in key economies such as France and Germany have undermined investor confidence. However, some experts highlight interesting opportunities and foresee a possible recovery in 2025.
European performance far behind the United States
European stocks are currently lagging behind their American counterparts. According to MSCI data, European stocks could post their biggest underperformance against the US in at least 25 years. At the same time, the euro has suffered a significant drop, losing more than 5% of its value against the dollar. Some analysts already anticipate that it could fall even further, possibly below the $1 peg, should the region’s economic problems continue.
The euro has lost 5.2% so far in 2024. Source: Yahoo Finance
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Can Europe surprise the skeptics?
Despite this adverse outlook, certain investors see a path to recovery. Caroline Gauthier, co-head of equities at Edmond de Rothschild, believes investors with little exposure to the European market could benefit if they can look beyond the immediate obstacles.
“We think Europe could be a positive surprise,” Gauthier said, highlighting that recovery opportunities could emerge amid this gloomy climate.
Attractive valuations in a pessimistic environment
The interest of some investors lies in current valuations. With sentiment so depressed, European assets could be undervalued, presenting an attractive entry opportunity for those willing to bet on political and economic stabilization in the region.
However, this recovery will largely depend on clarity in geopolitical and fiscal factors, elements that could be modified by key events such as elections and changes in business dynamics.
A gradual recovery
Although it is early to anticipate a full resurgence, the discourse around European markets could change significantly. If 2024 marks the lowest point for the continent, 2025 could be the start of a recovery narrative that rewards patient and strategic investors who take calculated risks.
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