Investors in European equities should overweight healthcare, insurance and autos and underweight utilities, telecoms and media, according to a report from Louis Capital Markets.
Andy Dodd, Louis Capital Markets’ Head of Technical Research, is particularly convinced by the argument for overweighting the insurance sector. He points out the clear uptrend in the relative performance of the STOXX Europe 600 Insurance (SXIP) versus the STOXX Europe 600 (SXXP), but says short-term signals show a slowdown in momentum (see chart). He thinks a pullback towards the trend is likely and will give a better entry point to the trade than current levels.
See full report: Louis Capital Markets Monthly Equity Report – Europe In Sight.