LONDON, Oct 2 Reuters Barclays European equity strategists have closed their underweight position in autos and discretionary stocks, due to an improving situation for consumers, and downgraded banks due to expectations for faster European Central Bank rate cuts.
We close our UW on Autos as the recent round of severe profit warnings, and poor performance, means a lot of the bad news is likely in the price now, said Barclays strategists, adding that the global ratecutting cycle and China stimulus should help the economy achieve a soft landing.
Barclays also closed their overweight position on banks, tactically cutting to market weight, due to weaker EU growth and expectations for faster rate cuts.
Shorter term we worry the ECB will need to cut more than expected to stabilise the economy, which could pressure NIMs net interest margins, Barclays said.
Reporting by Samuel Indyk; Editing by Amanda Cooper
Source Reuters