European stocks set to snap 2-week winning streak on growth woes

Bloomberg

European stocks were set for their first weekly drop in three, as investors consider concerns over the surging inflation and the war in Ukraine hurting growth in the region.
The Stoxx 600 Index was down less than 0.1% in London, with banks and energy sectors among the biggest decliners. Real estate and retail stocks outperformed.
Last week, the European benchmark erased losses sparked by Russia’s invasion of Ukraine on the optimism of peace talks, but this week the mood soured as economic data indicate an “unprecedented” rise in costs for parts and raw materials and as the Federal Reserve signalled plans for aggressive rate hikes. Although the index has crept away from a technical bear market, it is still about 8% below its January record high.
Keith Temperton, a sales trader at Forte Securities, said he doesn’t see European equities outperforming their US peers in 2022, a reversal from consensus expectations at the start of the year. “Money is fleeing Europe,” he said. “Heading into the quarter-end, it seems to me that volumes have also dried up somewhat. The US is ultimate haven for investors.”
European stock funds have been losing money for six weeks in a row, with outflows reaching $1.2 billion in the week, according to EPFR Global data.
UK retail sales unexpectedly fall in February, while another indicator showed German business confidence plunged to its lowest level since the early months of the pandemic as war in Ukraine caused energy prices to soar. The FTSE 100 slipped 0.3%, while the DAX Index was little changed.
“In the near term, outcomes for markets will focus primarily on the question of when we will reach — or if we have already reached — peak sanctions and oil prices,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note.
Strategists at Bank of America Corp, on the other hand, said poor investor sentiment and continued inflows into cash had triggered a “contrarian buy signal” for global equities for the first time since March 2020. A surge in outflows from stocks and high yield credit also indicates it’s time to buy, according to a client note.
Among individual movers, Trelleborg AB surged as much as 27% after agreeing to sell the tires business on which the Swedish industrial group was founded more than a century ago.