In 2024, sector performance within European equities diverged considerably. A gap of almost 40 percentage points separates underperformance in food & beverage and automobile stocks (-12% each) and the standout performance by banks (+26%).
Our analysis
The interest rate cuts in 2024 had surprising effects on various sectors’ trajectories. The unlikely beneficiaries were financial institutions (banking, insurance, financial services), which posted solid performance despite their normally positive correlation with interest rates. They sidestepped the effects of ECB monetary easing in 2024 and may continue to do so in 2025 with performance underpinned by sound balance sheets and a potential rise in banking volumes. Among the unlikely losers were real estate (-6%) and utilities (-3%), as they would normally be expected to benefit from Europe’s falling interest rates.
In addition, cyclical sectors had mixed fortunes, with sluggish performance for those exposed to consumer spending (automobiles) and sustained outperformance for industrial stocks (industrial goods: +14%). That being said, as the automobile sector was penalised by very specific challenges, a catch-up effect in 2025 cannot be ruled out.
Written on 17 January 2025. Opinions subject to change. This document has no pre-contractual or contractual value. It is provided for information purposes. The analyses and/or descriptions contained in this document should not be considered as advice or recommendations from Lazard Frères Gestion SAS. This document does not constitute a recommendation to buy or sell securities, nor does it encourage investment. This document is the intellectual property of Lazard Frères Gestion SAS - 352 213 599 RCS Paris 25, RUE DE COURCELLES - 75008 PARIS
