UBS upgrades financials and capital goods in European sector rotation
UBS has upgraded its outlook on financials and capital goods within the European equity sector, removing Energy and Materials from its highest-conviction list. Strategists attribute this shift to improving earnings revisions, attractive valuations, and strengthening macro signals across the region. Companies that fit this new narrative include IG Group, ACS, Rockwool, Prysmian, and SPIE.
UBS predicts a close to 18% EPS growth for Europe this year, contrasting with the lack of earnings growth in previous years. Although AI remains a significant earnings story, leadership is broadening to other sectors, with European AI enablers, electrification, and selected renewables among the highest-ranked themes. Purchasing managers' index data confirm the earnings story, with new orders indicators pushing above 50 in several sectors.
The Iran conflict has not caused the anticipated earnings shock, and fiscal policy momentum continues to build, particularly in Germany.
Brief written by urgent.news from Investing.com's own syndicated text. Machine-written — it may contain errors, so check the original before relying on it.
