European Equities May Benefit As $1 Trillion In U.S. Buybacks Vanish Into Thin Air

European equities may start to finally see some love, as they are now positioned to take advantage of one significant coming tailwind from the U.S., according to Bloomberg. Over the next 12 months, US stocks are going to lose a significant amount of support that they have received from buybacks, as the nearly $1 trillion buyback bonanza that has fueled stock purchases in the United States starts to come to an end, according to Sanford C. Bernstein strategists.

This could be an area where European stocks, due to their low dependence on buybacks, could see help as a result.

Bernstein strategists led by Inigo Fraser-Jenkins said:

 “This would remove one advantage of U.S. equities over Europe. As the buyback support is reduced it will make a stronger relative case for Europe.”

And the decision of the U.S. central bank to hold off on rate increases may have temporarily reduced concerns about debt hurting equities, but the topic is still on the table and credit spreads are expected to keep widening over the next year.

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