Bank of America (BofA) has changed its recommendation on European equities, moving from overweight to market weight (neutral). This decision comes after a robust 15 percent rally since December, fueled by improving macroeconomic trends in Europe.

Key Reasons for Downgrading

1. Market Already Priced for Recovery

• BofA believes most expected recovery in Europe has been accounted for in stock prices.
• Improved European PMI data may not induce further upside.

2. Heightening Global Economic Risks

• U.S. concerns: The Atlanta Fed’s Q1 GDP tracker is currently negative.
• Trade tensions contribute to further uncertainty.
• China’s growth factors are also being closely monitored.

Outlook and Monitoring Tools

While European markets appear to have performed well, BofA’s downgrade signals caution amid growing global economic challenges. Investors need to evaluate European resilience against broader macro risks.