FXStreet reports that economists at Natixis look at four tentative explanations for the preference for US equities over European equities.

“Stronger expected growth or a higher level of earnings per share in the United States than in the Eurozone would justify investor preference for US equities.”

“If long-term interest rates are low relative to long-term growth, then equity valuation should be expected to be high. From 2010 to 2013, the relative levels of interest rates and growth rates were more favourable in the United States than in the Eurozone. This has no longer been the case since 2014.”

“Tech companies have high growth and valuations and attract investors.”

“US companies issue bond debt to buy back their shares, which European companies do not do. This leads to expectations of higher earnings per share and indices, which attracts investors.”

U.S. stock-index futures rebounded on Monday following a four-week losing streak on Wall Street, as hopes of a global economic recovery increased after a report that industrial profits in China rose for the fourth straight month.

Global Stocks:

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FedEx (FDX) upgraded to Buy from Hold at Deutsche Bank; target $318

FXStreet notes that markets have been weak in September. The good news is that prices have corrected, with the S&P 500 now down about 10% from its August highs. But the bad news is that four specific risks are still hanging over the market and all are yet to be resolved. Andrew Sheets, Chief Cross-Asset Strategist at Morgan Stanley advises investors to remain patient. 

“Our economists and I think many others in the market had been assuming that the US would approve about $1 trillion of additional stimulus. But recent progress on this front has not been promising. And the emerging controversy over the fate of the US Supreme Court only further complicates this process. Indeed, it's very possible that ahead of the US election, Congress only has time to either pass additional stimulus, or confirm a new Supreme Court justice, but not do both. A trillion-dollar swing in economic support is, needless to say, a very big deal and has a large bearing on what the near-term economic outlook could look like.”

“History suggests that markets often struggle in the months leading up to a US presidential election, especially when the result looks uncertain or might be close.”

starting to rise again in Europe, while in the US 37 states now have R rates above 1.”

“It's been over four years since the original vote but the Brexit saga remains unresolved. And key deadlines are approaching over the next two months. Morgan Stanley's economists have recently raised their odds of a ‘no-deal’ outcome. The scenario that would create the most near-term market and economic uncertainty.”