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Banks to basics: Where sectors go next

 

We’re still positive on eurozone equities, but higher yields and a stronger euro demand caution. Knowing how a particular sector is likely to react could make all the difference. Banks, small-cap and value stocks are popular for a reason. If crowding concerns you, consider basic resources as your contrarian play.

If you only read one chart this week; make it this one.

 

How sectors react

sensitivity to euro moves and bond yields

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Disclaimers: 

Data and opinions as at 25 August 2017 unless otherwise stated. Source: SG Research, Factset & Bloomberg. SG Research taken from the Equity Strategy’s Europe Equity Compass, published on 10 August 2017. Sensitivity to bond yield (a proxy for rising inflation) - measured by taking average 2yr correlations to 10yr US treasury and bund yields.

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