ECB or Fed, who will cut interest rates first in 2024? BofA has no doubts: monetary easing will make these European securities soar, as their prices do not yet reflect this scenario.
In this article, we’ll explore 11 European stocks to buy, which could rally after the interest rate cut. According to a study by BofA, the stock market is already pricing in an easing of monetary policy by the Fed and the ECB, with the S&P 500 touching 4,800 points, but the performance of these securities could vary based on the speed of the cuts, with different scenarios depending on whether the Fed reduces the cost of money before the ECB or vice versa.
While both central banks have expressed a high degree of uncertainty about the policy direction, the current environment offers prospects for major central banks to cut rates. In any case, experts warn that the transition from a tightening cycle to an easing phase, in 2024, will only be possible thanks to the combination of two factors: the containment of inflation and milder conditions in the employment market.
According to BofA, these 11 European stocks in the Europe Stoxx 600 index are the best positioned to take off after the rate cut.
1) Carlsberg
Carlsberg, a leading Danish beverage company, is one of the companies that stand out in BofA’s analysis. With its international presence in the beer industry, Carlsberg could benefit from higher consumer spending spurred by lower rates, both in Europe and the United States. The company has shown surprising resilience to economic fluctuations, and the rate cut could be a catalyst for its further development.
- Carlsberg graph
- Source: Tradingview
2) British American Tobacco
British American Tobacco is another stock to watch according to BofA analysis. In an environment of falling rates, the tobacco industry could enjoy increased demand, as consumers may be more willing to spend on luxury products such as cigars. The combination of strong fundamentals and generous dividends could position British American Tobacco as an attractive option during times of economic uncertainty.
- BATS weekly graph
- Source: Tradingview
3) Diageo
Diageo, the leader in alcoholic beverages, could enjoy growing demand as rates fall. Its international presence and portfolio of premium brands make it well-positioned to capitalize on any changes in consumer habits linked to more favorable economic conditions. Investors may view Diageo as a safe haven in a volatile market.
- DGE graph
- Source: Tradingview
4) Unilever
Consumer goods giant Unilever is one of the companies BofA has identified as a potential winner in times of rate cuts. Investors may be attracted to its sustainability strategy, which could become increasingly relevant in an environment of accommodative monetary policy. The company could benefit from consumers more willing to spend on sustainable products.
- Unilever graph
- Source: Tradingview
5) Reckitt Benckiser
Reckitt Benckiser, focused on producing household and personal care goods, is another interesting company that stands out in BofA’s analysis. In a changing economic environment, demand for household and personal care products may remain constant or even increase. This outlook could make Reckitt Benckiser attractive to investors seeking stability and resilience.
- Reckitt Benckiser graph
- Source: Tradingview
6) LVMH
LVMH, a luxury conglomerate with a portfolio of iconic brands such as Louis Vuitton, TAG Heuer, and Christian Dior, is an intriguing choice in light of possible rate cuts. Luxury shoppers may be encouraged to spend more in times of falling rates, and LVMH could benefit from this dynamic. Its leadership position in the luxury sector makes it an attractive option for investors seeking exposure to a growing niche market.
- LVMH graph
- Source: Tradingview
7) Sydbank
Sydbank, a financial institution based in Denmark, is one of the examples of financial companies that BofA has identified as potential winners after the rate cut. In a lower-rate environment, banks could benefit from increased demand for loans and greater financial activity. Sydbank, with its strong position in the banking sector, could represent an attractive opportunity for income-oriented investors.
- Sydbank graph
- Source: Tradingview
8) Rentokil Initial
Rentokil Initial, which specializes in hygiene and disinfection services, is another company that could emerge as a winner in times of rate cuts. In a changing economic climate, the growing focus on healthcare and hygiene could benefit companies operating in this sector. Rentokil Initial, with its expertise in disinfection services, could benefit from increased demand from businesses and individuals concerned about public health.
Pay attention to market timing on this title: possible entries only in the case of confirmations above 470 pence. A bearish double top, already completed, looms over the chart.
9) Jyske Bank
Jyske Bank, another player in the financial sector, is an interesting addition to BofA’s list. With lower rates, investors may seek returns in sectors such as finance. However, it is essential to evaluate Jyske Bank’s risk management and ability to adapt to market dynamics.
- Jyske Bank graph
- Source: Tradingview
10) Glaxosmithkline
Glaxosmithkline, a pharmaceutical giant, is another company that could have a positive return after rate cuts. Health remains a priority even in uncertain economic times, and pharmaceutical companies could benefit from increased demand for healthcare products and services. GSK, with its large portfolio of pharmaceutical products, could be an attractive choice for investors seeking long-term stability and growth.
- GSK graph
- Source: Tradingview
11) TotalEnergies
TotalEnergies, active in the energy sector, could exploit the opportunities created by lower rates. The transition to sustainable energy sources could accelerate, giving TotalEnergies a key role in providing innovative energy solutions. Investors should evaluate its sustainability strategy and its position in the evolution of the energy sector.
- TotalEnergies graph
- Source: Tradingview
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-01-22 07:47:00. Original title: 11 azioni europee da comprare ora (secondo gli analisti)
