Barclays strategists turned bearish on European quality stocks, citing the imminent risk of inflation and profit stability no longer anchoring the market. The team led by Emmanuel Maconga wrote in the research report: “The valuation has only returned to the long-term average, and the profit advantage is narrowing. We believe that high-quality European stocks lack support for a continued rebound.” Strategists upgraded low-volatility stocks to neutral ratings, viewing the sector as a “more attractive macro-hedging tool.” The report points out that interest rates are still the dominant driver of style factor performance.

Barclays strategists turned bearish on European quality stocks, citing the imminent risk of inflation and profit stability no longer anchoring the market. The team led by Emmanuel Maconga wrote in the research report: “The valuation has only returned to the long-term average, and the profit advantage is narrowing. We believe that high-quality European stocks lack support for a continued rebound.” Strategists upgraded low-volatility stocks to neutral ratings, viewing the sector as a “more attractive macro-hedging tool.” The report points out that interest rates are still the dominant driver of style factor performance.