Risk taking
In the first half of the year European stocks have really grown in their hunger for risk. Some of the biggest returns within European stocks have been stocks, banks, electric vehicle manufacturers and bookmakers. Some of the lockdown leaders have fallen into the background.
These move reflect a move away from 2020’s more defensive positioning and a move towards risk. The sectors that should benefit from a post COVOD-19 world have seen the best returns. This is sectors like Banks, Autos, and Construction. Banks have seen nearly a 30% return ltd, Autos over 25%m and construction just over 20%. The only group that has sone some decline has been the utility sector with a loss of around 3%.
Europe still offers some potential value over the comparatively higher priced US stock market, but selection becomes more important now. Many analysts are commenting on the fact that markets are in a late stage bull market, but timing when that retracement occurs is always tricky. One alternative (or addition) to trying to pick out winners from Europe as a whole could be to consider the FTSE 100. That gap up above into 7500 is just screaming fill me and it really does seem a question of when not if. The added feature to this is that any earlier retracement in the FTSE 100 just gives a better price for investors. So if there was an index to invest into and forget about for a few years it is hard not to see the technical attraction of the FTSE100.