One more reason to dislike U.K. stocks

Another day of European stock gains and once more the FTSE 100 is trailing behind the region-wide index. BOE policy makers aren't doing Britain's gauge any favors, as the prospect of higher rates on bonds dims the allure of one of U.K. stocks' biggest attractions -- their dividend yield.

The FTSE 100's yield advantage has been fading for much of the past six months and the spread hit its tightest level since April 2016 earlier this month. It's one more reason -- on top of the Brexit spectre and lackluster economic data that the U.K. benchmark is failing to catch a break.

It's not all bad, according to Bloomberg Intelligence. British operating margins stand out as a bright spot across Europe, with a weighted average margin of 21.5%, rivaling those of the U.S., BI equity strategists wrote Feb. 22. But even that is overshadowed by a Brexit discount, as the forward P/E between the FTSE 100 vs. both the S&P 500 and Euro Stoxx has dropped about 300 bps since the June 2016 referendum, BI said today.

Source: Bloomberg Pro Terminal

Jr Trader Alexander Kumanov

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