BofA Strategists Make Contrarian Bet on Shunned European Stocks

Strategists at Bank of America Corp. are making a contrarian bet on European stocks as the continent’s main equity index heads for its worst year of underperformance relative to the US since 1976.

Scope for fiscal spending appears to be improving in Europe, while any potential ceasefire in Ukraine could ease pressure from high energy prices, the BofA team led by Sebastian Raedler wrote in a research note. By contrast, the US economy faces headwinds from a stronger dollar and a potential weakening in real disposable income, the strategists said.