(Bloomberg) — European stocks were muted, with defensive sectors such as real estate and utilities outperforming amid lingering worries around artificial intelligence.
The Stoxx Europe 600 Index was little changed as of 1:40 p.m. in Frankfurt. Insurance and health care — traditionally considered safer at a time of heightened volatility — also led gains, while economically sensitive miners and industrial goods were among the biggest laggards.
Investors have been shifting to European markets to find safety from the turmoil stemming from American tech shares and worries that AI will upend the software industry. Bank of America Corp.’s latest fund manager survey showed that a growing number of investors think the structural underperformance of Europe’s equity markets is over.
Bank of America strategists led by Andreas Bruckner cited data showing that a record 74% of investors see European growth accelerating in the near-term as German fiscal stimulus boosts macro data. The percentage of investors expecting greater upside for European cyclicals over defensives is close to a one-year high, they wrote.
“Weak liquidity from the US long weekend and Lunar New Year creates a difficult technical backdrop, and heightened geopolitical risk sentiment has crept into markets too,” said Emma Moriarty, portfolio manager at CG Asset Management. “But expectations of easier global financial conditions suggest that operating conditions might be turning more favorable for European companies.”
In the UK, the export-heavy FTSE 100 Index rose 0.3% as the pound weakened after economic data showed the unemployment rate rose to a near five-year high.
Meanwhile, Aroundtown SA jumped 5.6% after Viceroy Research said it’s long on the real estate company, calling the stock “deeply undervalued.” Copper miner Antofagasta Plc fell 4.8% after its earnings and dividend underwhelmed some analysts.
Kerry Group Plc declined 4.3% as the Irish food producer posted below-consensus volume growth in the EMEA and APAC markets and headwinds from exchange rate moves.
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–With assistance from Jan-Patrick Barnert, Sagarika Jaisinghani and Charles Riley.
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