European Equities Trail US Value by 5% as PMIs Point to Structural Weakness

2 articles · Updated · bnpparibas-am.com · May 29

MSCI Europe has stayed negative since the war began, while the Russell 1000 Value index is up more than 5%, extending European equities’ underperformance since Feb. 27.
May flash PMIs show Germany and France slipping back into contraction, with European readings down about five points and all below 50, while US PMIs remain in expansion after falling less than two points.
A roughly 7% average Brent premium over WTI in the past two months suggests the Iran war’s energy shock alone does not explain the gap; services weakness in Europe has also been sharper than in the US.
The report argues deeper structural problems — including weaker corporate dynamism — are weighing on Europe more than the conflict, though investors may still find opportunities in sectors tied to strategic-autonomy spending on defence, healthcare and energy resilience.

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