Higher, bumpier, broader – July Chart Pack

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Higher, bumpier, broader – July Chart Pack

Barclays | European Equity Strategy

gap with the US amid a waning stagflationary shock, while also offering broadening beyond

crowded Tech-heavy indices. Sectorally, we still favour the capex supercycle winners through

Miners, Industrials & Tech, alongside Banks, but mindful of their consensus nature, we have

selectively raised exposure to laggards via Luxury, while staying away from low-growth sectors

like Staples, Healthcare & Telecoms. Elsewhere, as EM may remain volatile if the dollar and

Semis trade stay unsettled, we move to MW vs. DM, while Japan retains reflationary tailwinds

despite rising tactical risks around weaker yen and BoJ policy.

• Hedge the heat, keep the upside. Liquidity & earnings tailwinds have kept the bull market

on track, but FOMO leaves positioning near highs post record June equity inflows. Summer

seasonality is notoriously tricky, although CTA/HF de-risking has already removed some froth.

Crowding and exuberance in Tech warrant hedging/diversification, but solid earnings and

reasonable valuation continue to fundamentally support the space.

• US-Iran de-escalation unlocks broadening. Oil back to pre-war level materially reduces the

stagflationary hit to Europe, with eco surprises rebounding and ECB rates expectations

peaking, making EU equities more investable. Risks remain around near-term supply-

demand imbalances, but oil typically fell sharply after past supply shocks ended, and this

time around Trump likely needs lower oil sooner rather than later, ahead of the mid-terms

• Goldilocks-ish macro. The end of the global central banks' easing cycle is a key risk, with the

Fed's reaction function under new chair Warsh still unclear and potential BOJ intervention to