Energy Shock Reopens Transatlantic Gap

The expected convergence between US and European equity valuations has failed as geopolitical conflict in the Middle East and energy price shocks favor the more insulated US market. Supported by the AI investment cycle, US equities have re-expanded their valuation premium over European peers.

Key Takeaways

• 1.The trend of US and European equity valuation convergence has reversed due to energy shocks and the Iran war.
• 2.US equities remain resilient, anchored by the AI investment cycle and structural insulation from geopolitical energy disruptions.
• 3.The US Dollar is supported by high risk aversion from the Middle East conflict and multi-year highs in Treasury yields.

Table of Contents

• Energy shock reopens transatlantic gap
• THE CONTEXT
• THE DATA
• OUR VIEW
• OTHER THINGS TO NOTE
• Developments in the Middle East and higher UST yields to keep the USD on bid
• Author
• Editors
• UniCredit S.p.A
• Legal Notices

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