Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

BlackRock upgrades Europe stocks on economic restart, warns of U.S. risks

Published 06/29/2020, 09:34 AM
Updated 06/29/2020, 01:10 PM
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Karin Strohecker and Dhara Ranasinghe

LONDON (Reuters) - Europe's efforts to kickstart economies hit by COVID-19 has prompted BlackRock (NYSE:BLK) Investment Institute to upgrade its view on European stocks to "overweight", while warning of a risk that the U.S. policy response could be scaled back too soon.

"The region (Europe) is exposed to a cyclical upside as the economy restarts, against a backdrop of solid public health measures and a galvanizing policy response," BlackRock, the world's largest asset manager, said in its mid-year outlook.

The same applied to Japanese stocks, which BlackRock upgraded from "underweight to "neutral".

This came at the expense of U.S. stocks, for BlackRock reduced exposure to "neutral", citing risks of fading fiscal stimulus, an extended epidemic and renewed China-U.S. tensions.

"The U.S. was strong in its monetary policy response, its fiscal response," Mike Pyle, global chief investment strategist at the BlackRock Investment Institute, said during a mid-year media briefing.

"As we look out over the coming 6-12 months, we think there are significant risks around the U.S. retrenching too soon the policy support," Pyle added.

World stocks have been on a rollercoaster ride in the first half of 2020.

Having slumped 35% from Feb. 20 to March 23, they are now within 10% of February's record highs thanks to lashings of fiscal stimulus, interest rates reduced to 0% or below in most major economies and massive quantitative easing by central banks.

European stocks (STOXX) are down almost 14% since the start of the year, while the S&P 500 (SPX) has slipped 6% over the same period.

In fixed income, BlackRock said it liked U.S. Treasuries and expected long-term bond yields to fall further than other developed market peers.

BlackRock also downgraded both hard currency debt and equities in emerging markets to "underweight", citing limited policy space to counter the economic fallout from the coronavirus pandemic.

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.