European markets will continue underperforming the U.S., according to a new report from Oppenheimer that reiterates the firm's bullish U.S. outlook.
Markets in the U.S. have seen volatile swings during the past month and a half, but they're still outperforming European equity markets. Stocks in Spain and Germany are in correction territory, and the FTSE 100 index is coming off its third negative week in four.
Oppenheimer's head of technical analysis, Ari Wald, said several key factors prompt him to choose U.S. stocks over those in Europe. Here are his reasons why.
• Europe's latest breakdown relative to the S&P 500 confirms Oppenheimer's recommendation in going overweight U.S. equities.
• Europe's underweight position in technology stocks has been a central reason for this underperformance. For instance, the Euro Stoxx 50 has a 7 percent weighting in technology, compared with the S&P 500's 25 percent.
• Oppenheimer holds a long-term bullish outlook on technology, and in this environment the firm sees difficulty in Europe outperforming.
Bottom line: The U.S. will likely continue to outperform European markets due in part to the lack of technology market share in Europe, according to Oppenheimer.