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Deutsche Bank to Morgan Stanley Shun European Cyclical Stocks

  • Weaker China growth, slowing PMIs may hit tech, autos in 2018
  • ‘Significant sector rotation’ on the way, says Morgan Stanley

Some European equity strategists are betting the rally in stocks sensitive to the economy is nearing an end.

In their 2018 outlooks, Deutsche Bank AG and Morgan Stanley present underweight recommendations on European cyclical stocks, including the technology sector. Their calls come as the lead a gauge tracking the shares enjoys over its defensive counterpart holds near the biggest it’s been in 6 1/2 years -- a result of stronger global growth and expectations for stimulus from the U.S. administration.