The last part of the year in The bag bears the colors of the United States flag. The open gap in global stocks from August leads Wall Street’s main index, the S&P 500, to rise by 25% in 2024 while the Old Continent’s main stock market benchmark, the Stoxx 600 , advance of 5.9%. THE the difference between the two reaches five times and leaves at the gates of 2025 the greatest distance between the two indices in percentage terms since the start of the current year.
The two major stock indexes are separated as if the Mid-Atlantic Ridge, the great rift in the middle of the ocean from which it takes its name, is pushing the two indexes in opposite directions. However, stock movements have little to do with the movement of tectonic plates. Real market earthquakes and volcanic eruptions are Donald Trump, Vladimir Putin, central banks and market inflation expectations. And all this is currently working against the European stock market.
Without Donald Trump becoming President of the United States, the market is already assuming a regime change in the global economy which has its effect on variable income. For example, since November 5, the main Wall Street index has increased by 3% while the Stoxx 600 has fallen by 0.9%. However, the decline of one and the triumph of the other come from before. Investors flocked to buy U.S. securities domestically and abroad the Magnificent Seven of technology and led indices such as the S&P 500 or the Nasdaq 100 to record new all-time highs. Even the Russell 2000, American small and mid-caps, managed to reach heights not seen since 2021.
On the other hand, the main European indices are moving downward. In addition to the volatility due to global geopolitics, with the war in Ukraine in a new scenario of war escalation, the Eurozone continues to the detriment of China’s weak growth and the slowness of his recovery. “It was incorporated a risk premium since the arrival of Trump. “Geopolitics may keep European stocks at a high risk premium, but we believe there is still room for further revaluations if the cycle continues,” comments Emmanuel Cau, head of European equity strategies at Barclays.
“The markets have turned to exclusively American assets, another example of American exceptionalism,” underlines Edmond de Rothschild AM. The concentration of capital in the US stock market is so high that levels recorded during the crisis have already been exceeded. dotcom. In other words, so far in this century, there has never been as much money in American companies as there is today, relative to the total number of shares purchased on other world stock exchanges, such as calculated by Capital Group. “The concentration level of the index The S&P 500 remains at stratospheric heights“, commented the company’s head of equities, Eric Stern.
Additionally, the top ten companies in the Wall Street index, primarily tech billionaires, account for one in three dollars of the index’s market capitalization. In other words, if we compare the evolution in 2024 of the S&P 500 with the equally weighted S&P 500, which eliminates the effect of large capitalizations, the latter selective advances by 16.4% over the year compared to 25% for the Wall benchmark index. Street. exists focus on US stocks but there is also agglomeration in a handful of stocks in particular.
More potential on the European stock market
For all of the above, the opinions of experts on which side of the Atlantic will be present in the coming months are very different. Generally speaking, analyst firms choose to buy the American stock market in the short term, which Donald Trump arrives at the White House and the snap elections in Germany are resolved. This does not exempt Wall Street from risk. “US stocks could, however, be limited by high valuations and a low risk premium initially, despite strong earnings,” summarizes DWS while recommending diversification by geography and assets given the unpredictability of the market.
The market consensus which reflects Bloomberg considers the upside potential of the S&P 500 to be 10.1% from the target level of 6,497.1 points (average market indicative price). This path forward that analysis firms predict in the coming months would be below the 11% expected from the global stock marketrepresented in the MSCI World Index. “The remaining upside potential for the stock market this year appears uncertain, as valuations have already risen sharply. However, with the positive economic outlook and rising corporate profits, the positive trend is expected to continue at first next year”, estimates J. Philipp E. Bärtschi, sustainable AM expert from Safra Sarasin.
But it is on the European stock market that the upside potential is greatest. The expert consensus places the Stoxx 600 price target at 587.7 points that imply a 17.3% advance trip.
In addition to ETFs (exchange-traded funds) which reproduce the evolution of these indices, there are funds focused on American stocks which are not left out in their evolution over the year compared to the S&P 500. To invest in euros, Algiers Focus Equity Z EU of Algiers SICAV, focuses on Wall Street companies and this year obtained a return of 56.3% on the stock market, best in class in 2024 and doubles the S&P 500. It is followed by MS INVF US Growth C of Morgan Stanley with 38.5%.
On the European side, he is at the top of the table Miralta Narval Europe A FI from the Spanish company Miralta Narval, with profitability of 25.1% this year. Behind it would be Brandes European Value B EUR Accwith a return this year of 15.55% (three times higher than the Stoxx 600).
