Barclays: Eurozone stocks are the safest at the moment

For the first time in several quarters, upside policy risks in Europe might outweigh downside political concerns, Barclays strategists including Ajay Rajadhyaksha write in note. Global political risks “much lower” for the first time in more than a year. French elections produced strong mandate for a pro-euro, reform-minded president. Lower risk of snap elections in Italy; signs that Five Star movement has lost ground. Barclays remains overweight equities over fixed income globally; euro-zone equities remain top pick. Synchronized global recovery remains on track, but core inflation in economies such as US, Japan has been weak; this is risk positive for now: it allows central banks to remove accommodation even more slowly. Measures of both implied and realized volatility are very low: this is not dangerous market complacency but a reflection of an abnormally tranquil macro environment, with a benign economic outlook, very supportive financial conditions, and lower political risks: Barclays

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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