It’s All About the Business Cycle

Shares in companies most responsive to economic growth are extending last year’s gains

European cyclical stocks, which rallied almost eight times as much as their defensive counterparts in 2017 in euro terms, are extending gains into the new year. As the region’s economic momentum shows little signs of slowing, the shares deemed to benefit most in times of growth are trading at a record relative to those seen as less responsive to economic swings. Strategists from Citigroup Inc. to UBS Group AG are bullish on sectors geared to the economy, with the latter recommending banks and automakers.

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