A Greek Tragedy Made in Italy?: European Equity Pre-Market

Euro Stoxx 50 futures are down 0.7% despite a strong U.S. session, although not strong enough to break September highs. Italian stocks will keep the center stage after European finance ministers gave a frosty reception to the country’s new budget and the country’s bonds closed the day at their weakest level in more than four years, with the European Commission warning of a Greek-style crisis.

So maybe it’s no surprise that strategists from HSBC and JPMorgan agree that the U.S., and probably the world equity markets, will keep outperforming Europe for the time being. Political noise, sluggish growth and earnings momentum are cited as the main reasons. Nevertheless, looking at the chart below, Europe’s underperformance is still striking and appeals to contrarian traders considering that risks are on the upside.