UBS upgrades European banks as ECB tapering approaches

Updated: Tue, Sep 05, 2017
02:53 pm
Reuters
RELATED NEWS
Dollar at one week high after hawkish Fed minutes; Asia stocks capped Dollar at one week high after hawkish Fed minutes; Asia stocks capped
Japan exports fall for first time since 2016 as trade war fears mount Japan exports fall for first time since 2016 as trade war fears mount
U.S. oil edges up after 3 percent drop on big stock build U.S. oil edges up after 3 percent drop on big stock build
Trump turns attention to budget cutting after slashing taxes Trump turns attention to budget cutting after slashing taxes

UBS strategists have upgraded European banks to overweight from neutral and cut the more defensive pharma sector to neutral as they expect cyclical sectors to get a boost from the European Central Bank`s plans to scale back its bond buying programme.

"We highlighted previously (that) the cyclicals are looking more attractive as they have led EPS momentum but shown slight underperformance vs defensives. What is changing is we now have a potential catalyst in sight with the ECB tapering approaching," they said in a note.

They also said that the recent strengthening in the euro made them more cautious on U.S.-exposed stocks but more positive on domestically exposed companies.

The ECB is expected to announce the end of its 2 trillion euro plus bond-buying scheme later this year, even though concern among policymakers over a strong euro has fuelled expectations the stimulus will not be withdrawn quickly.

UBS said PMIs and earnings momentum in Europe all peaked back in May but believes this is a "mid-cycle pause" and already sees signs of the PMIs and earnings stabilising.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

By continuing to use the site, you agree to the use of cookies. You can find out more by clicking this link

Close