Trade war – European equities as the winner?

European equities performed well in the first quarter of the year, outperforming the U.S. market by the most in 25 years. The tariff announcements of US President Donald Trump on April 2 caused markets to slump, but DWS thinks that European equities have less to lose than their US counterpart.

“The good performance of Europe and especially Germany compared to the U.S. since the election of Donald Trump is remarkable given that export-oriented countries have been considered particularly vulnerable to Trump’s punitive tariff plans from the outset,” says DWS Chief Investment Officer Vincenzo Vedda.

The asset manager upgraded European Equities to overweight. “Our upgrade is a relative upgrade, particularly against the U.S. market (which, after all, still accounts for two-thirds of the global equity market),” Vedda explains. “Or, to put it more clearly: we believe that the downside risk for European equities is lower than for U.S. equities. At the same time, however, we also see better positive return potential in Europe should tariffs not be maintained at their current level.”

Read the full insight here.