Paris leads despite British stocks being hit by recession fears, mini-Budget backlash and worries about Paris
After being beaten by Paris, London lost its title as Europe’s biggest stock market. This was due to UK stocks suffering from recession jitters.
Bloomberg calculations revealed that the market value of Paris stocks has surpassed those in London in dollars after closing the gap of $1.4 trillion (PS1.2 Trillion) since Brexit.
A reversal has been caused by the pound’s fall versus the USD, recession fears hitting UK-focused stocks, and the rebound in France’s heavyweight luxury stock shares including LVMH.
Bloomberg reports that London’s market capitalisation combined is $2.821 trillion, while French stocks are $2.823 trillion.
This represents a significant reversal in fortunes over the past decade, with UK stocks nearly $2 trillion more in dollar terms than their French counterparts at one time in 2014. When the pound was stronger, it was also a massive reversal in fortunes.
London’s reputation for being “unloved”, due to economic malaise and persistent political uncertainties, has gotten it a bad name.
The FTSE 100 appears to be one of the best global performers in a difficult year for markets. However, the domestic-focused FTSE 250 has suffered an 18% sterling loss in 2022.
The Sterling’s decline of more than 13 per cent against the greenback in the United Kingdom has also affected the British stock market in dollars. This was due to growing recession fears as well as the market backlash against “Trussonomics”.
Comparatively, the dollar has dropped 9pc to the euro.
Morgan Stanley stocks strategist Graham Secker warned that UK stocks could be affected by the economic backdrop.
According to Wall Street, the UK will experience a more severe downturn than any other European country in 2023. Then, it is expected that there will be a slow recovery in 2024.
Mr Secker stated that the macro backdrop was likely to change next year, despite the UK’s best relative performance in almost 30 years. According to our economists, the UK will experience the greatest economic contraction of any major country next year. This is due to the cost of the living crisis escalating and being augmented by tighter fiscal policies.
French stocks have seen a rebound in recent months thanks to luxury goods company LVMH, which is the most valuable company on the Paris stock exchange. The CAC 40, the Paris blue-chip index, is up 17pc from late September and currently trades at a seven-month high.
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