Live Markets: Autos: Brussels seen bringing carbon target relief
23/09/2024 10:48
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STOXX 600 up 0.1%
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Utilities up, luxury down
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Eurozone PMI unexpectedly contracts
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Wall St futures steady
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AUTOS: BRUSSELS SEEN BRINGING CARBON TARGET RELIEF
European autos .SXAP are down 10% YTD and their record
cheap valuations still don't look low enough to attract
investors who remain concerned about slowing demand and Chinese
competition clouding the sector's earnings outlook.
Yet, despite widespread scepticism, some traders are
considering what it would take for the sector to experience, if
not a recovery, at least a short-term bounce.
In a note on Friday Citi provides some comfort.
The U.S. bank says the European Union looks increasingly
likely to defer a carbon emission deadline, something which they
say would be a "net positive" for the battered sector.
"Many European auto OEMs are clearly facing serious
challenges in meeting the 2025 target, impacting further on
already-challenged industry competitiveness. This is clearly
raising the risk to industry employment, which may provide the
catalyst to drive political/regulatory change," says Citi.
"We now believe that there is a >50% likelihood of a change
in EU CO2 regulations," it adds, also saying a market rotation
into cyclicals would also help, along with rate cuts and Chinese
stimulus.
For more views, check out this story: Investors shun
European car stocks despite rock bottom valuations
(Danilo Masoni)
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