Live Markets: European stocks have rotated, will they do so again?

Nokia Oyj

Wed 11:12

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EUROPEAN STOCKS HAVE ROTATED, WILL THEY DO SO AGAIN? 
European stocks are only down about 3% from their August peaks, but the rotation just below the surface has been dramatic. 
The first half of the year was all about AI exposed stocks, and cyclicals, most of all banks, but in the last few months those have taken a pasting and defensives have gained. 
Morgan Stanley say in a Wednesday note thata group of European AI enablers — semiconductors and some hardware and construction stocks — have underperformed the MSCI Europe index by 25% since their June peak, erasing over half of their year to date gains. 
In contrast, what they call European AI challenged stocks — most notably software — have recovered 80% of their year to date loses in this time. 
Another big rotation has been out of cyclicals and into defensive stocks. 
Banks .SX7P are down 12% from their August top, while Medtech, Life Sciences, Pharma and Tobacco are up 14%. 
MS have seen more rotations too. The stocks most positively exposed to the closure of the Strait of Hormuz — think energy and chemicals — are back near their post conflict highs, while those most negatively exposed are hovering around their relative lows. 
So what if the wheel turns again. MS have made a list of the stocks that would make most sense to buy if the "rotational bear market reverses". 
Top of the list is Nokia NOKIA.HE followed by Swiss industrial VAT group VACN.S and neocloud Nebius NBIS.O 
(Alun John)
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