Outlook on Europe: July 2023

Lazard's Outlook series provides a forward-looking view, over the short, medium, and/or long term, of asset classes, sectors, regions, or countries from the view of Lazard Asset Management. In this edition, LAM portfolio managers share their outlook for Europe in Q3 2023.

Summary

• European equities performed solidly over the first half of 2023 but may struggle over the near term as the effects of higher rates begin to bite.
  
  
• Although the region faces major economic headwinds, earnings resilience and low absolute and relative valuations mean European stocks arguably look relatively better placed to withstand a potential global slowdown.
  
  
• Heavily inverted European and U.K. yield curves continue to point to a recession in both the eurozone and the U.K.
  
  
• Higher bond yields mean European fixed-income investors can pick up attractive yields for modest risk, but we suggest steering clear of riskier high-yield debt at this time.

Click here to read our Outlook on Europe for Q3 2023.