As Americans went to the polls last week, European investors had one question: How much room did Donald Trump have left to govern? At first Europe’s stock market hardly reacted. The Stoxx 600 rose 1.8% on Wednesday but relinquished most of its advances. By Friday’s closing it was only 0.4% above Tuesday’s level.
The Euro Stoxx 50, which tracks the 50 largest corporations in the euro area, followed suit. It climbed 2% on Wednesday, and closed the week just 0.4% ahead. European banks gained 3.2% from Tuesday to Friday, most of that on Wednesday alone. Jordi Visser, head of AI macro research at 22V Research, said it was the industry’s best week since June.
Travel and leisure stocks did even better, gaining 3.9% on the back of lower gasoline costs. Brent crude fell more than 9% on Wednesday as markets anticipated that a weakened president would be less likely to intensify the fight with Iran.
Utilities were up 2.5% and healthcare up 2%. In contrast, energy stocks were down 4.2% as oil prices were cheaper, and technology lost 3.6%. The reason Europe did better than Wall Street is simple: its market has considerably fewer AI stocks and far more banks.“The equity market is a distorted reflection of the economy,” Sharon Bell, senior European equity strategist at Goldman Sachs, stated in a study.
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