Live Markets: Domestics to keep outshining exporters - JPM

LANXESS AG

16/06/2025 11:19

STOXX 600 up 0.3%

Travel stocks rebound, energy up

Israel-Iran conflict in focus

Kering may pick Renault CEO as new boss

Wall Street futures edge higher

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

DOMESTICS TO KEEP OUTSHINING EXPORTERS - JPM

Domestic stocks are outshining exporters in Japan, the UK and the euro zone with the divergence starting in earnest in March, according to JPM equity strategists who say this trend will continue.

"The question is how does the upcoming US tax bill fit into the above, in particular with respect to the Section 899?"

The proposed tax applies a progressive tax burden of up to 20% on foreign investors' U.S. income.

JPM says uncertainty over the exact interpretation is high, and modifications are likely, as some of the provisions would make capital flows into the US less attractive.

"Net result is that USD should be weaker."

Likely further U.S. dollar weakness in the second half and continued mixed trade headlines will keep domestic names in the lead.

Digging deeper, even differentiation between corporates with international operations could emerge.

"...those which are leveraged to non-US could start to look more interesting vs those with US revenues, post weakness," says JPM.

"Within the US exposed ones, those with US subsidiaries could be at a relative disadvantage, if Section 899 takes effect."

JPM has identified 83 European companies that have meaningful exposure to the U.S. through their subsidiaries and could be at risk of being impacted by Section 899. These stocks have been lagging the STOXX 600 .STOXX so far in 2025 and this could continue.

Those with the biggest market cap on their list are SAP SAPG.DE, Novo Nordisk NOVOb.CO, Hermes HRMS.PA, LVMH LVMH.PA and AstraZeneca AZN.L.

The smallest names include Swiss electrical component maker Landis+Gyr LANDI.S, German chemicals company Lanxess LXSG.DE and Spanish steel company Acerinox ACX.MC.

(Lucy Raitano)

*****

EARLIER ON LIVE MARKETS:

EUROPE'S STOCKS RESILIENT CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES STEADY, EYES ON KERING CLICK HERE

MARKETS IN WAIT-AND-SEE MODE ON MIDEAST CLICK HERE