Investing.com -- According to Deutsche Bank (ETR:DBKGn) strategists, European equities will maintain their lead over US stocks, although the pace may slow down due to factors such as DeepSeek, German elections, and tariffs.
The team, led by Maximilian Uleer, states that while their overall outlook remains unaltered, the ongoing discussions around tariffs are expected to put more pressure on equity markets.
The strategists point out that the majority of US sales by large European companies are local-for-local. They also anticipate that DeepSeek will continue to impact the Magnificent 7 and US exceptionalism.
The bank has downgraded retail and staples to neutral, reflecting the impact of tariffs. Despite this, the strategists remain optimistic about the potential for more market-friendly politics emerging from the German elections, such as tax cuts or increased fiscal spending.
However, they also note that growing divisions among political parties could create short-term political uncertainty, making the formation of a government more challenging.
The Euro Stoxx 50 Index, which has risen by 6.1% year-to-date (YTD), continues to outperform the S&P 500, which has seen a 2.7% increase over the same period.
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