LONDON, June 16 Reuters European equities and the euro look set to lose out to U.S. markets in the months ahead, as a stellar run in early 2023 has fizzled out in the face of tepid global economic performance and the AI hype that has brought a sparkle to Wall Street.

The SP 500 is up 14 year to date and more than 20 from its October low  putting it in a technical bull market. It overtook Europe39;s STOXX 600, which is up 9, in late May for the first time this year.

The currency has acted as a bit of a drag too. In dollar terms, the STOXX 600 is still lagging, having gained 11.3 in 2023, while the euro is up 1.1. In midApril, the euro had gained 3.6 against the dollar and the STOXX 600 was up more than 14 yeartodate when priced in dollars.

Relative to the U.S., European equities are looking less interesting and attractive, said Bernie Ahkong, cochief investment officer at fund manager UBS O39;Connor Global Multistrategy Alpha.

Earlier in the year, we were quite happy to allow more of our long picks to be in European names and have more short picks in the U.S., whereas now we39;re saying consciously 39;ok let39;s put a higher hurdle on European longs and a lower hurdle on European shorts, and vice versa for the U.S.39;.

Ahkong also highlighted a divergence in the regions39; monetary policy with more rate hikes and a longer path to any rate cuts expected in Europe and the excitement around artificial intelligence, as favouring the U.S.

Other fund managers are also…