Citi strategist: European equities may face vulnerabilities in the short term

Citigroup strategists said that European stock markets may face vulnerability issues in the near term, as the current market positioning is the most bullish since 2019, and Fluctuation tends to rise when central banks begin to ease policy. The team led by Beata Manthey said in a note that earnings delivery is likely to be particularly important in 2024 after large fluctuations in the Intrerest Rate market and more aggressive rate cut expectations are factored in. EPS growth in Europe needs to beat pessimistic market expectations. Strategists expect a slowdown in earnings per share in European equities despite the weak economy, but avoid a recession in profits. Strategists will buy the dips based on the recommendations of Citi’s Bear Market list, but will not chase the rebound. The Euro Stoxx 600 is expected to rise to a record 510 points by the end of the year. Citi’s sector strategy has seen a cyclical/growth bias amid an improved macro risk balance, but strategists have added some defensive measures against expected Fluctuation.