This came as an encouraging news as the possibility of a Brexit had intensified in earlier polls, which raised concerns about bouts of volatility and U.K. But all that uncertainty, and more, is already reflected in these ultra-low prices. But if the post-Brexit bounce continues — and there’s no guarantee it will — not all stocks will enjoy the same recovery. For instance, big U.S. banks continue to face real challenges that have only been worsened by the situation in Europe. While stocks in the U.S. and most of Europe fell sharply immediately after the June 23 referendum, they rebounded almost as quickly. Within three weeks of the vote, the S&P 500 reached record peaks; the Stoxx 600, a broad Europe-wide index, made up almost all of the 11% it lost immediately after Brexit; and Britain’s FTSE 100 index was flirting with a 52-week high.
European Stocks to Buy Now
Paris-based Sanofi is a pharmaceutical leader that focuses on treating immune disorders, inflammation conditions, cancer and hepatitis. Size-wise, it’s comparable to familiar domestic names like Gilead Sciences Inc. (GILD) and Amgen Inc. (AMGN). Like the U.S., Europe faces a similar demographics tailwind that is boosting demand for health care services from an aging population. While a significant share of SNY revenue is what stocks to buy after brexit booked in the U.S. from its treatments, its European headquarters link it to more favorable market sentiment and insulate it from potential U.S. dollar currency volatility. As a result, shares of this European stock are up an impressive 20% this year while many other U.S. health care stocks have lagged. Founded in 1866 and one of the biggest consumer staples stocks on the planet, Switzerland-based Nestle is a reliable and profitable company and thus worthy of attention.
Won’t be able to tweak or play a significant role in influencing the laws of the single market. Still, those outsized declines made already bargain stocks an even bigger bargain. Before the crash, valuations in Germany and France were 20% higher than in Britain, and they remain significantly richer. But Italy and Spain were both cheaper than the UK pre-Brexit, and are even more so today.
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But its executive team responded by rolling up their sleeves and getting serious, cutting costs and trimming Spotify’s payrolls as it refocused operations. The results have been tremendously successful, with SPOT posting year-over-year revenue growth of 16% for the fourth quarter, and gross margin and free cash flow both hitting records. Shares have soared about 100% in the last 12 months, and are up about 15% since Jan. 1 despite struggles for similar U.S.-based digital content firms. London-based banking and insurance giant Lloyds has surged about 30% this year and is up about 43% in the last 12 months, thanks to improving operations for the sector and much more favorable sentiment compared with U.S. financials. With scale and a big dividend on top of recent outperformance, LYG is a top European stock to buy now. Only time will tell if this recent contraction for domestic markets turns into a prolonged downturn for U.S. stocks.
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Shares have fallen in price, and because their companies’ profits are buoyed by sales abroad in dollars and euros that are now worth more when translated into pounds. That puts the probable “real” expected return on British shares, he says, at around 9%. Add inflation, and you can expect to pocket annual gains of 11% or so over the next several years. For instance, the firm believes the slump for T-Mobile US (TMUS) since Friday makes little sense. After all, the wireless provider run by John Legere has zero international exposure.
- Stocks across the globe climbed as investors piled into riskier assets and abandoned safe havens such as government bonds and gold.
- The Stoxx Europe 600 advanced 3.6%, its largest gain since August, with bank shares in the index gaining 4.5%.
- In the years after its 2018 IPO, Spotify struggled to turn a profit despite its massive user base.
Thanks to the latest pro-Bremain polls, concerns about U.K.’s exit from the EU and the potential damage it will have on its economic growth, jobs, investment and trade abated. Banking on this optimism, British firms having significant exposure to the EU and the rest of world will stand to gain the most. Exit from the EU had weighed on stocks in recent trading sessions, dragging the Dow down 1.1% last week, the index’s biggest weekly decline in more than a month.
- The Brexit vote has underscored Europe’s general economic dysfunction, but investors still see some promise in these European markets.
- But, weekend polls showed a swing to “remain” in the run-up to the Brexit vote, which eventually sent stocks higher on Monday, with 9 out of 10 sectors of the S&P 500 ending in the green.
- Rates on government bonds in Germany and Switzerland fell further into negative territory after Brexit, while yields on 10-year Treasuries dropped below 1.5% and touched record lows.
- That trend has left the multinationals less attractive and made the consumer-oriented ones look enticing, say Peak and Bill Kennedy, manager of the Fidelity International Discovery Fund.
The lower the CAPE you buy in at, the higher your future returns are likely to be, because a lower CAPE delivers both a higher dividend yield, and for the same growth in earnings, a bigger capital gain. Shares—Arnott’s measure of large-cap British stocks—stood at just 11. Managing a diversified portfolio across borders is more complex than ever. Among Continental economies, Peak sees promise in Spain (see above).
Investing after Brexit: Managing risk through diversification
The recent rally of Britain’s FTSE index isn’t a great indicator of that country’s economic prospects, investors say. After the Brexit vote, Britain’s pound fell to a more than 30-year low against many foreign currencies. Stephen Peak, manager of the Pan European and International funds for Henderson Global Investors, says the currency plunge effectively bifurcated the British stock market. Spanning across 28 countries and encompassing more than 500 million consumers, the EU has played an important role in shaping Britain’s economy. Access to a single market has helped British firms export and expand their business. About 75% of British firms that trade goods globally do so with the EU.
But, weekend polls showed a swing to “remain” in the run-up to the Brexit vote, which eventually sent stocks higher on Monday, with 9 out of 10 sectors of the S&P 500 ending in the green. Investors’ anxiety about the uncertain consequences of a Brexit ebbed as the “remain” side recovered lost ground. By comparison, the CAPE on the S&P 500––even after the upheaval from Brexit––is a lofty 25. At those prices, investors are likely to be stuck with real returns in the 4% range at best, half of what they can expect from UK stocks. Today, Arnott reckons that the number is about a point lower, both because U.K.
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In tandem, Sharesight’s exposure report offers a clear view of how your portfolio is distributed across sectors, asset types, and geographies — even drilling down into the underlying holdings within ETFs. This makes it easier to spot overlaps, concentration risks or unintentional gaps in your diversification strategy. Stock markets around the world rallied on Monday as polls showed support swinging in favor of the U.K.
Still, the Brexit vote has encouraged the Federal Reserve to put interest rate increases on hold. That in turn could help boost corporate earnings growth, which has been mediocre of late. Lower rates should continue to spur consumer spending and encourage lending, notes Scott Minerd, global chief investment officer at Guggenheim Partners. One of the more complex challenges for UK investors in the post-Brexit era is managing currency risk.
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Subsequently, the quality of trade that Britain has with the rest of the world and its entrepreneurship will not stand to lose as the prospect of a British exit from the EU looks to be on the wane. This calls for investing in British firms that have a considerable exposure globally including the EU. Such firms also saw their share price move north following pro-Bremain polls. To access this content, you must have prior permission and a valid contract. One of the top-performing stocks in Europe lately, if not the entire the world, is streaming music leader Spotify. In the years after its 2018 IPO, Spotify struggled to turn a profit despite its massive user base.
But in the meantime, European stocks are booming, and many investors have started looking abroad for opportunity. While some changes have been sudden, others will unfold gradually — from financial services regulation to cross-border tax treaties. The one constant is uncertainty, which makes diversification, transparency and responsiveness more important than ever. Sharesight’s multi-currency valuation report allows investors to see the value of each investment in both its original currency and GBP, using end-of-day FX rates. Whether you’re holding US tech stocks, European ETFs or global funds, this report helps you understand your true performance. We have selected four such British firms whose shares have jumped yesterday as Brexit fears diminished.
Admittedly, the U.S. is a big market for this familiar company that makes Kit-Kat chocolates, Häagen-Dazs ice cream, Hot Pockets frozen foods and other products. But the stable nature of its consumer staples brands, along with a headquarters in Switzerland that insulates it from currency volatility, has made NSRGY quite attractive lately. As proof, shares are up about 23% since Jan. 1 to significantly outperform most other large-cap names in the staples sector. But geographically speaking, BTI is part of Europe — and while a considerable portion of revenue does come from North America, the majority of sales are booked outside the U.S. While shares are up about 13% since Jan. 1, there’s still plenty of room for continued upside in addition to long-term stability.