Report
Explaining the divergence in share prices between the United States and the euro zone
Share prices have risen significantly faster in the United States than in the euro zone since 2013. Potential explanations for this situation include: Faster earnings growth in the United States than in the euro zone; A higher weight of technology companies in the United States; Share buybacks in the United States and not in the euro zone, which both reduce the supply of shares and, mechanically, reduce the number of listed shares; A more favourable differential between long-term interest rates and growth in the United States than in the euro zone; Lower equity risk aversion in the United States; equivalently, structurally stronger demand for equities in the United States. All these explanations play a role. In the most recent period, the gap between share prices in the United States and the euro zone has continued to widen, all the above explanations remaining valid with the except ion of share buybacks.
Provider
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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