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A classic pattern: cyclicals down, defensives up
Financial tradition dictates that investors focus on sectors that are essential to life, because they will continue to generate sales in the event of an economic crisis. People continue to eat, wash, heat, treat themselves and communicate . What's more, nothing is ever binary in finance, and the digital economy has somewhat altered this simplistic analysis of what is defensive and what is not. But you get the idea.
Let's focus on Europe. This movement can be seen in the summer 2024 sales wave (data taken since mid-July):
The three most defensive sectors in Europe:
- Utilities (+3% since mid-July)
- Consumer Staples (+1%)
- Healthcare (0)
The three sectors most under attack in Europe:
- Consumer Discretionary (-7%)
- Automotive (-8.5%)
- Technology (-16%)
Healthcare and consumer staples prove their resilience
We have isolated the sectors of the 40 stocks that have gained the most over the past month in Europe, among market capitalizations of over 10 billion. Unsurprisingly, they include :
- 50% healthcare stocks (notably traditional players like Roche or GSK, as opposed to trendy players like Novo Nordisk, which paid a high valuation).
- 25% consumer staples. Kerry, Unilever, or tobacco, with British American Tobacco.
- 10% infrastructures, in energy (EDP Renovaveis) or telecoms (Cellnex, Ericsson).
- We note the presence of stocks from three more cyclical sectors, but with their own narratives. Foodservices (Compass, Sodexo), with Compass's strong financial performance. Certification (SGS, Bureau Veritas...), again following better-than-expected figures from the sector's leading players. Finally, defense players Kongsberg Gruppen and Dassault Aviation also reported well.
