(Marketwatch) It may be a typically subdued day for stocks post-Thanksgiving, but escalating tensions between the U.S. and China over President Donald Trump’s support for Hong Kong have concerned investors.
Trump signed two bills expressing support for human rights in the region on Thursday and U.S. futures are falling for a second consecutive day. Stocks had closed at record highs ahead on Wednesday but there was to be no holiday cheer as China reacted furiously to the President’s intervention.
With geopolitical risks mounting, Barclays has expressed a “tactical preference” for European stocks over U.S. equities in 2020. Barclays forecasted a similar mid-single digit price upside for U.S. and European equities, but said the balance of risks favored the latter. Emmanuel Cau, European equity strategist at Barclays, cited European stocks’ higher exposure to emerging markets and cheaper valuations. He added that while Barclays is overweight on U.S. stocks, they are relatively more expensive and face policy uncertainty ahead of the 2020 election.
Cau said: “Europe has marginally underperformed the U.S. year-to-date, but has closed some of the performance gap recently.”
He added: “U.S. equities have tended to perform well in the fourth years of presidential terms, but this time around, the Trump impeachment hearings could affect investor confidence given the possible impacts on the outcome of the next election,” citing concerns over the potential impacts of Senator Elizabeth Warren’s policies.
