Inside Markets — SXXP

Today’s market internals for the STOXX Europe 600 Index (SXXP) look like the three sessions immediately following the US/China trade détente (5/27-5/29) when the momentum factor sold off. The main difference is positioning given that Eurozone stocks are now well-owned and a bit crowded.  From a fundamental perspective, we expect a more challenging set up for Q2 SXXP earnings growth given recent euro strength and some ‘payback’ from Q1 front-loading.  The expected pullback could be an opportunity to add exposure, but the field of large liquid names with sufficient earnings growth is small and the regulatory environment remains largely unchanged.