It’s time to look at UK domestic earners given the uncertainty in the US, particularly those that benefit from the Labour government's plans, according to analysts at Panmure Liberum.
“We find an attractive investment opportunity in UK domestic earners, especially those companies that benefit from a Labour government,” sai the broker.
According to the broker's analysts, the US economy is slowing down and may head into recession in the first half of 2025, but the turmoil at the start of the week is overdone.
Markets are oversold, adds the broker, but US equity markets are still pricing in overly optimistic earnings growth. Meanwhile, the improving economic outlook in the UK and Europe should support earnings going forward.
There are also large valuation discounts for UK and European stocks compared to the US, which provides further support.
“We recommend that investors use weakness in UK and European stocks to buy, with a focus on companies that generate large shares of their revenues domestically.”
Specifically, that means 'buy' recommendations on contractors such as Kier Group PLC (LSE:KIE) and Morgan Sindall, student accommodation groups Empiric and UNITE, bakety chain Greggs PLC (LSE:GRG) and specialist bank OSB.