Observations

Goldman Sachs strategists highlighted that the companies in European equity benchmark have seen more upward revisions that those in the US market. That creates underperformance of European stock market relative to the US peers.

Traditionally defensive stocks such as Consumer Staples or Utilities are amongst worst losers, while traditionally volatile IT stocks are surprisingly resilient.

NVIDIA’s performance impresses: the stock has made more than 50% over the past month. The fundamental factors are clear: growing demand on the fastest processors from the side of Artificial Intelligence services is out of the question.

Largest European food producers (Danone, Nestle, Unilever) have been under cost inflation pressure for month. The chart above displays Danone stocks. It is easy to notice that sustainable uptrend is only possible when commodities are going down. Unlike the broad market, Danone and Unilever shares are still significantly lower than before coronavirus outbreak.

Gas scarcity in Europe coupled with the inflation pressure pushes fertilizers prices up. Perhaps this is the right moment to pay attention to German K+S stocks. It has been under pressure caused by huge debt and low profitability issues.