Rotations at play in equity markets

In 2024, the equity rally has weakened in the tech heavy Nasdaq Index which was the leader last year, now in favour of other regions. Large cap companies in the Eurozone and Japan posted double digit returns in Q1.

”We expect rotations within equity markets to benefit Europe and we continue to stay positive on Japan.”

  • In a strong start to the year, equity markets showed signs of rotation in favour of Europe and Japan.
  • European equities may benefit from appealing valuations, while Japan from the domestic investor demand.
  • During the week, tensions in the Middle East pushed oil to the highest level since October.

Moving forward, we think there could be a continuation of the broadening of the participants in the rally, which so far has been concentrated around few names. In particular, the fact that the expected slowdown will not end up in a recession could benefit some European cyclical and value stocks. We also continue to be positive on Japan amid resilient earnings and the revamp of the NISA* program that should support domestic demand.

*NISA is the Nippon Individual Savings Accoung tax-free stock investment program.

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