Morgan Stanley Sees More Gains Ahead for Europe’s Energy Stocks

Europe’s energy sector has room to extend its outperformance versus the broader market as investors are only beginning to price in a structural shift in supply risks amid war in the Middle East, according to analysts at Morgan Stanley.

Analysts led by Martijn Rats upgraded their stance on the sector to attractive from in-line. They said that while oil and gas price shocks stir inflation, tend to push interest rates higher and are a headwind for economic growth and equities in general, they benefit energy stocks.