Top 3 European stocks to buy heading into 2025

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Despite recent poll shifts favoring Trump, market pricing remains cautious, according to Deutsche Bank.

The extent to which a Trump win is being priced in remains cautious despite discussions about "Trump trades" in the market. DB illustrates this in both the FX market via the US dollar and a basket of the S&P 500 companies most sensitive to tariffs.

The drop from 1.12 to 1.09 in EUR/USD is mainly due to the repricing of Fed expectations following strong US payroll numbers, they argue. Only the recent decline reflects changes in US election probabilities. They also note that a basket of S&P 500 companies sensitive to tariffs has been moving sideways, only recently starting to underperform, mirroring recent polling trends.

"The market has started to price an increasing probability of a Trump win, but the degree to which this is impacting market pricing is still quite modest," Deutsche Bank writes.

Bank of America made a similar point this week.

The dollar cooled off alongside bond yields yesterday and that's setting for a mixed mood towards the end of the week. Tech shares led gains in Wall Street but stock futures are looking more muted in the new day. As a whole this week though, equities are still down with a watchful eye on bond market developments.

In FX, we are seeing light changes on the day thus far. EUR/USD not even breaking a 8 pips range underscores the lack of appetite ahead of European trading. The antipodeans are slightly lower and that is bringing some attention to the charts at least. AUD/USD is taking a peek below its 200-day moving average of 0.6628, so that's one to watch out for.

Looking to the session ahead, there won't be much on the agenda to shake things up. The German Ifo business survey is the main highlight but it should just reaffirm more sluggish conditions in the economy to start Q4. As much as the outlook reading might show an improvement, it hasn't been followed up by hard data over the last four to five months. So, take any beats there with a pinch of salt.

This just means we might be in for a quieter one with some light extensions to the daily ranges. As yields cool, the dollar is also taking a breather but we'll see if there is appetite to chase anything again but only later in US trading.

0645 GMT - France October consumer confidence0800 GMT - Eurozone September M3 money supply0800 GMT - Germany October Ifo business climate index

That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

The euro is at the highs of the day as it rebounds following three days of selling. The gains are mostly driven by the US dollar slide as it retraces following a long run. Treasury yields are down today with US 10s lower by 5 bps to 4.19%.

Zooming out further, the euro has dug itself into a big hole since late September and there are calls for new lows before year end.

EURUSD daily

To their credit, ECB policymakers this week are widely acknowledging that inflation will be lower than they thought. What needs to come with that is an acknowledgement that they're behind the curve and need to cut rates by 50 basis points at successive meetings or risk dismal growth in 2025 (and beyond as fiscal excess is reigned in).

We're in a regime right now -- I believe -- where early aggressive rate cuts will see currencies rewarded. That's exactly what has happened with the US dollar in the past month. However as time goes on, that window of opportunity is closing, particularly for the ECB.

So I take this bounce in the euro as a standard overbought bounce. Nothing in the data suggests a pickup or one that's coming. The best hope for EUR/USD bulls is the US dollar side of the equation. This pair bottomed yesterday after the Beige Book continued to highlight poor economic growth in the US, something that hasn't appeared in the data yet.