- Macro Strategist
Skip to main content
- Insights
- Capabilities
- Funds
- Sustainability
- About Us
- My Account
Spain, Institutional
Changechevron_rightThe views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional or accredited investors only. This material is provided for informational purposes only, should not be viewed as a current or past recommendation and is not intended to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. Past results are not a reliable indicator of future results. Forward-looking statements should not be considered as guarantees or predictions of future events.
What to watch for in the near term?
The gap opening up between US and European nominal growth expectations is striking. Nominal year-on-year growth expectations for the fourth quarter of 2024 are 4.7% for the US, up from 3.8% in December, while they are only 2.8% year on year for the eurozone, down from 3.4% in December (based on Bloomberg consensus real growth and CPI expectations). If this decoupling trend, continues, it could have a number of implications:
From an equity market perspective, it seems February was all about Nvidia’s earnings and AI. After all, Nvidia gained US$277 billion in stock market value in just two days, more than the total market cap of Coca Cola. However, this point is somewhat misleading. While January’s strong equity performance was limited to the US and Japan, regional breadth clearly widened in February.
Emerging markets (4.4%), Japan (6.1%) and Continental Europe (4.1%) all outperformed US equities (3.7%), with only the UK (1.6%) underperforming the US. Japan is the best-performing region year to date, with Japanese equities more than making up for missing the fourth-quarter rally in European and US equities. Interestingly, despite the divergence in the earnings outlook, the Euro Stoxx 50 has outperformed the S&P 500 and the Nasdaq year to date.
Given the combination of decent performance in the first two months of this year and falling earnings, European equities are looking incrementally more expensive relative the US equities. This is also true on a sector-adjusted basis. While European equities still look cheap, albeit less so than a few months ago, emerging markets (EM) equities have de-rated further, meaning they are now looking cheaper than European equities on some measures. From a historical context, the US remains the most expensive region.
The consensus for global earnings-per-share growth in 2024 is around 8.7%, with the most optimistic expectations in emerging markets (around 16.6%) followed by Japan (around 12.3%) and the US (around 9.7%). The most pessimistic expectations are in Continental Europe and the UK (at around 3.4% and 2.6%, respectively). In aggregate, global earnings have been revised down over the last month, with more sell-side analysts downgrading 12-month forward earnings than upgrading (negative revisions). The weakest earnings revisions have been in Europe, while Japan and the US have experienced relatively strong earnings momentum.
Source for all data: DataStream as of 5 March 2024
Expert
Impact investing in emerging markets: Growing opportunities, shifting challenges
Continue readingMultiple authors
4 equity themes: Budding opportunities in small caps and more
Continue readingWeekly Market Update
Continue readingBy
Picking the right building blocks for a climate-aware portfolio
Continue readingMultiple authors
Financial Market Review
Continue readingMonthly Market Snapshot — March 2024
Continue readingURL References
Related Insights
Stay up to date with the latest market insights and our point of view.
You've been subscribed
Thank you for subscribing. You can manage your subscription using the links provided in any of our subscription emails.
Impact investing in emerging markets: Growing opportunities, shifting challenges
Members of our impact bond team discuss their evolving emerging markets opportunity set and the importance of a bottom-up approach to value creation.
Multiple authors
4 equity themes: Budding opportunities in small caps and more
Starkly different policy agendas from Biden and Trump are examined in terms of how they may affect the supply side of the US economy.
Weekly Market Update
What do you need to know about the markets this week? Tune in to Paul Skinner's weekly market update for the lowdown on where the markets are and what investors should keep their eye on this week.
By
Picking the right building blocks for a climate-aware portfolio
For asset owners integrating climate change into their multi-asset portfolios, members of our Investment Strategy & Solutions Group offer five important insights.
Multiple authors
Japan equity: Reason to believe
Our expert argues that corporate governance reform and the Japanese economy's escape from persistent deflation have laid the groundwork for a sustainable equity rally.
Financial Market Review
A monthly update on equity, fixed income, currency, and commodity markets.
Monthly Market Snapshot — March 2024
A monthly update on equity, fixed income, currency, and commodity markets.
A turning point for US small caps
Myth busting US small caps: why now could be a compelling entry point for the asset class.
Multiple authors
Four questions for investors after Japan’s historic hike
With the Bank of Japan having finally moved out of negative rates, Macro Strategist John Butler identifies the four key questions he believes investors should focus on.
By
Do fundamentals support a risk-on tilt?
Surprisingly strong economic growth, declining inflation, easy financial conditions — can it get any better for markets? Members of our Investment Strategy & Solutions Group offer their outlook, including their latest views on equities, bonds, and commodities.
Multiple authors
Will proposed corporate governance reforms help to narrow the “Korea discount”?
Could South Korea's Corporate Value-up Program help to narrow the so-called “Korea discount” and build on the momentum gathering pace elsewhere across Asia to improve corporate governance and shareholder returns?
URL References
Related Insights
© Copyright 2024 Wellington Management Europe GmbH. All rights reserved.
WELLINGTON MANAGEMENT FUNDS ® is a registered service mark of Wellington Group Holdings LLP.
Wellington Management Europe GmbH. Registered office: Bockenheimer Landstraße 43-47, 60325 Frankfurt am Main, Germany. T: +49-69-677761-500. VAT-number DE 326304943 (Umsatzsteuer-Identifikationsnummer) Commercial Register of the local court Frankfurt am Main (Handelsregister des Amtsgericht Frankfurt am Main), HRB 115460 .
Wellington Management Europe GmbH, is authorised and regulated by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht)
For professional investors and intermediaries only. This content is not suitable for a retail audience.
we’d love your feedback!
Help us improve our website. For every short survey taken, we give 2 to the Wellington Management UK Foundation to support educational charities helping economically disadvantaged children in EMEA.
Japan equity: Reason to believe
Continue readingBy
Toshiki Izumi, CFA, CMA