Janus Henderson: Improved risk-reward and a fertile hunting ground for European stock pickers

Janus Henderson: Improved risk-reward and a fertile hunting ground for European stock pickers

September 14, 2023

ECB
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Robert Schramm-Fuchs, Portfolio Manager on the European Equities team at Janus Henderson Investors, comments on the recent ECB Interest Rate Decision:

'It was probably a close decision, but we did get that one final interest rate hike from the ECB that the stock market was mostly expecting. Judging from the language of the statement and downgraded mid-term inflation estimates, it sounds like the ECB is done now with the hiking cycle, and we should expect a long plateau.

Historically, it seems equity markets have tended to like the last rate hike in a cycle whether a recession followed or not. Europe’s largest economy Germany certainly has been on the brink of a technical recession throughout this year, and the Eurozone overall not so far removed from it.

Insofar, this should no longer surprise negatively. Many cyclical European stocks are already priced for recession. Consequently, we now see improved risk-reward and a fertile hunting ground for European stock pickers.'

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