Wednesday 26 October 2016

US and European stocks fall but have room to rise

Markets were mixed on Tuesday.

The S&P 500 fell 0.4 percent and the STOXX Europe 600 fell 0.3 percent but the Nikkei 225 rose 0.8 percent.

Despite the weak performance of US and European stocks on Tuesday, some see opportunity in them.

Ed Yardeni of Yardeni Research said in a note on Tuesday that while the overall stock market looks fully valued, "there may be room for stock multiples to expand further, especially for beaten-up sectors like financials and health care".

Richard Barley at The Wall Street Journal wrote that after lagging other markets for most of 2016, European stocks are now looking relatively attractive in value. He said that the STOXX Europe 600 excluding the UK trades on 14.7 times the next 12 months’ earnings compared to 16.6 times for the S&P 500.

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