European momentum stocks retreat, but fundamentals remain solid, energy sector bucks trend and rises (Goldman Sachs)
Goldman Sachs' European weekly report pointed out that the Stoxx 600 index fell 1.1% last week, but the market was not generally down.
Goldman Sachs' European weekly report pointed out that the Stoxx 600 index fell 1.1% last week, but the market was not generally down. Driven by rising oil prices, GSCI Energy was the best-performing asset class with a weekly return of +6.6%. Momentum stocks, on the other hand, have retraced significantly. Goldman Sachs believes that this is more a technical adjustment and position rotation rather than a deterioration in fundamentals. The report emphasizes that the earnings revision trend of European companies is still positive, and EPS growth expectations are still improving, which provides solid support for the market. This shows that the market’s dominant logic is shifting from simply “chasing rising momentum” to “fundamental verification.” One-sentence conclusion: The momentum retracement in the European market is a healthy adjustment. The rise of the energy sector and solid earnings fundamentals indicate that the driving force behind the market's subsequent rise will be more balanced and sustainable. Positive/negative: Structurally positive for the energy sector. Momentum stocks that have experienced excessive early gains are short-term negative. The market has responded to this rotation, but the momentum switch may not be complete yet. Catalysts: 1) Core data of the European earnings season, verifying fundamentals; 2) Whether oil prices can continue to run at high levels; 3) European Central Bank interest rate decision and speech.