Deutsche Bank Withdraws Overweight U.S. Stocks Call, Downgrade Rating to Neutral After 6% Outperformance

According to Deutsche Bank strategy team, on Monday (June 16) the bank withdrew its overweight recommendation for U.S. stocks relative to European stocks, downgrading the relative rating to neutral. The strategists locked in approximately 6% of outperformance accumulated since U.S.-Iran tensions emerged.

The bank cited diminishing impact from three previous drivers: widening U.S.-Europe growth gaps, higher S&P 500 technology weighting, and lower U.S. market sensitivity to Iran conflict spillovers. Deutsche Bank now expects U.S.-European earnings growth differentials to narrow from 18 percentage points in Q1 to approximately 8 percentage points in Q2, as European companies benefit from reduced U.S. dollar headwinds and Brent crude gains of roughly 50% year-over-year boosting energy sector profits.