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SOFTWARE: TIME TO CALL A BOTTOM?
After months of largely indiscriminate selling, software stocks are showing signs of life, but Barclays cautions it may be too early to declare a durable bottom.
The iShares Expanded Tech-Software Sector ETF IGV.N has rallied about 10% from its February low, but is still down around 20% this year, far worse than the nearly flat global equity index.
The UK bank says while the recent bounce could point to improving sentiment, fresh artificial‑intelligence headlines may put renewed pressure on valuations, also noting investor positioning remains a key factor.
"While hedge funds have materially reduced exposure, long-only portfolios remain heavily invested. Therefore, despite increasingly attractive valuations, this positioning backdrop makes it difficult to call a definitive bottom in software," write Barclays analysts including Sven Merkt in a Monday note. "That said, we see the current levels as very attractive for long-term focused investors."
Barclays is focusing on relative winners from AI. Its framework flags SAP SAPG.DE as the strongest beneficiary, with Temenos TEMN.S and Dassault DAST.PA also well placed, while Sage SGE.L and TeamViewer TMV.DE appear more exposed.
(Danilo Masoni)
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EARLIER ON LIVE MARKETS:
STOXX EDGES HIGHER AS FED COMES INTO FOCUS, DEFENSIVES LAG CLICK HERE
BEFORE THE BELL: EUROPEAN FUTURES RISE AS OIL PRICES FALL CLICK HERE
TO DOT, OR NOT TO DOT, THAT IS THE QUESTION CLICK HERE