Furthermore, firms with a significant presence in emerging markets reported the largest increases in their EPS revision ratios throughout April. In contrast, companies heavily tied to the U.S. and European markets experienced more substantial declines. This analysis from Bank of America corroborates an earlier forecast from Morgan Stanley, which predicted that economic growth in Asia would surpass that of both the United States and Europe this year, primarily driven by robust domestic demand in Asian countries. The table below outlines ten large-cap European stocks with notably high EPS revision ratios, as identified by Bank of America. This metric is calculated by assessing the difference between the number of positive and negative EPS revisions over the previous month, divided by the total number of estimates during that timeframe.

Luxury Brands Outperforming in the Market include industry giants such as Hermes, Burberry, and LVMH, all of which rank prominently on Bank of America’s list. The parent company of Louis Vuitton, Moët & Chandon, and Hennessy announced in April that it stands to benefit significantly from the reopening of China post-COVID, as the resurgence of travel is expected to rekindle spending among affluent consumers. Following these positive developments, LVMH shares reached an all-time high, reflecting a nearly 30% increase this year alone. Additionally, the EPS revision ratio for Novo Nordisk remains strong, buoyed by the success of its popular weight-loss medication, Wegovy, along with other promising products in its pipeline.

In general, both luxury goods and pharmaceutical stocks have demonstrated resilience and even outperformed during periods of high inflation, as these companies possess the ability to raise prices more effectively than others in the market. However, Bank of America also notes that equity funds focused on European markets have faced challenges recently. They reported seven consecutive weeks of outflows until very recently, marking the highest rate of withdrawals since mid-December. The investment bank further revealed that actively managed funds experienced outflows totaling $1.79 billion, while passive index-tracking funds saw $1.19 billion withdrawn. This marks a significant shift, as it is the first time this year that these funds have recorded such losses overall, underscoring the current volatility in the market.