Goldman Confident of European Stocks Resurgence

With U.S. interest rates set to rise and Europe’s likely headed lower, certain assets on the continent look like a good bet, Goldman Sachs said.

It’s staying overweight European equities and local-currency credit on a three-month basis to position for “tailwinds” from the European Central Bank (ECB) and the currency.

“We expect the ECB to ease further at the December meeting to counter downside risks to inflation,” Goldman said in a note Wednesday, forecasting the deposit rate to be lowered by 10 basis points to negative 30 basis points. It also expects the bank to extend its quantitative easing (QE) program through the end of the third quarter of 2017.

A basis point is 1/100th of a percentage point.

That’s likely to weaken the euro as funds flow out of the currency and toward assets offering better-than-negative returns.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza