European stocks continue to attract investors, UBS reports

Published 04/03/2025, 11:32
© Reuters.

Investing.com -- UBS sees a continuing shift of investments into European stocks, as funds that have been flowing into US technology stocks for years are being partially redirected. This trend is taking place even though some investors remain skeptical about the ongoing rally in Europe.

Shane Carroll, an Equity Derivatives Strategist at UBS, has shared that despite the recent shift towards Europe, clients are generally not heavily invested in this region. This information was gathered from client feedback during marketing interactions.

In a note sent via email, Carroll also observed an ongoing increase in the implied volatility of European equities, a trend that continues as indexes reach new peaks. This rising volatility has been driven in part by the VIX, a measure of market volatility, which has been pulling up the implied volatility in Europe.

Other contributing factors include ongoing uncertainties such as the situation in Ukraine and potential tariffs.

Clients have also expressed concerns about the possibility of a further selloff in the S&P 500. The best-performing hedges, according to UBS, are those that can take advantage of the still-high skew, such as put spreads and "down-and-out puts". These strategies can provide protection against adverse price moves.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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