With U.S. Stocks at Peaks, Gap With Europe Hits Widest Since ’12

  • DAX falls most as Bayer declines after Monsanto suit
  • Commodity producers extend highest prices since June 2015

When it comes to stocks, the rift between Europe and the U.S. keeps on widening.

Companies in the Stoxx Europe 600 Index trade at their lowest valuations in more than four years relative to those in the S&P 500 Index, which hit an all-time high on Tuesday. And yet, investors are still shunning them. The regional gauge dropped 0.1 percent on Wednesday, halting a two-day gain.

“Nobody loves and wants Europe,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “For U.S. and other global investors, Europe is stagnating and in a constant circle of political uncertainties.”

Banks dragged down the Stoxx 600 as much as 0.6 percent, before it pared its decline as the euro weakened after data showed U.S. durable-goods orders climbed in October. Miners advanced for a third day, while Germany’s DAX Index fell the most in the region. Even as economic data for the euro area have been beating forecasts, investors have remained skeptical as Italians prepare to vote in December on a constitutional referendum and the campaigns to choose the next French and German leaders are under way.

Stoxx 600 companies trade at 14.2 times estimated profits, about 16 percent lower than the S&P 500. The gap between the two is the widest since European Central Bank President Mario Draghi pledged to do whatever it takes to save the euro. While his stimulus program has helped the region’s shares for four years, the benchmark gauge is now heading for its worst annual performance since the height of the sovereign-debt crisis in 2011.

U.K. stocks were little changed as Chancellor of the Exchequer Philip Hammond presented its budget update to Parliament. The FTSE 100 Index erased a gain of as much as 0.9 percent as he slashed his economic-growth forecast and said the government will need to borrow more because of Brexit.

Among stocks moving on corporate news:

  • Foxtons Group Plc slumped 14 percent, the most since June, as the U.K. decided to ban real estate brokers from charging fees to tenants.
  • Bayer AG lost 1.4 percent after Monsanto Co. was sued over claims its chief executive and board members stand to improperly profit from Bayer’s acquisition.  
  • Mortgage provider Paragon Group of Companies Plc rose 2.4 percent after saying it will buy back shares.
  • Endesa SA gained 2.3 percent as the Spanish unit of Italy’s Enel SpA said it targets a profit increase.
  • Airbus Group SE climbed 2.4 percent as it’s poised to cut jobs.
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