European equities' multi-week outperformance — which persisted while AI-related
volatility weighed on other regions — may be reversing, market strategists warn.
Growing bearishness cites a narrowing valuation gap versus US stocks, politics
instability, technical overbought signals and slowing corporate earnings as
reasons to trim European exposure. Luca Paolini, chief strategist at Pinhao
Asset Management, said the firm is very cautious after the rally, noting the
European valuation discount to the US has narrowed, growth is weak and earnings
momentum is fading, and it is avoiding most European assets in favor of markets
with greater upside.
