Growth & Tech Stocks Lead Gains at Start of Year

Our first markets barometer of the new year shows growth equities remain in favour after outperforming value through 2023

Fernando Luque 5 February, 2024 | 9:40AM
Facebook Twitter LinkedIn

Cash

European stock markets have had a slow start to the year, with the Morningstar Europe Net Return Index up 1.4% in euros in January. But this result hides sharp differences between sectors, factors and styles. 

Starting with factors, the Large Growth segment rose by 4.1% while Large Value declined by 0.6%. There were also differences between large and small companies, with the former gaining a combined 2.1% in January compared to 1.0% for the latter.

European stock factor heat map

Among large cap growth companies, the biggest contributors to January's gains were ASML Holding NV (ASML; +17.1% in euros), Novo Nordisk A/S (NOVO B;+11.0%) and SAP SE (SAP;+15.3%).

On the Large Value side, Deutsche Telekom AG (DTE; +4.6%), Volkswagen AG (VOW; +7.2%) or AXA SA (CS; +5.7%) rose strongly but could not offset losses in some of the companies that weigh more heavily by market capitalization, such as Shell PLC (SHEL; -3.3%), TotalEnergies SE (TTE; -1.2%) or Rio Tinto PLC (RIO; -4.3%).

At the sector level, there were large differences in performance in the first month of the year. The biggest gainer was the technology sector, rising 8.1%. We have already mentioned the strong performance of ASML Holding NV and SAP SE which contributed the most to the sector's performance, though Dassault Systemes SE (DSY), Capgemini SE (CAP) and ASM International NV (ASM) all rose by more than 9% in euro terms.

Another sector that did well in January was healthcare, thanks to Novo Nordisk, which is by far the European company with the largest market capitalization in the sector. Other contributors to the sector's strength were GSK PLC (GSK), up 9.8% in euros, Novartis (NOVN), up 5.1% and Sanofi (SAN), up 4%.

Among the sectors that suffered losses in January were utilities, led lower by RWE AG (RWE) and EDP Renovaveis (EDPR), which dropped by 16.6% and 18.8% respectively. Basic materials were also weak, with a decline of 3.4%. Glencore PLC (GLEN) fell by 9.5% in euros and BASF (BAS) by 8.9%.

European stock performance by sector

Regarding valuations, the trend remains the same: value is more attractive than growth and large companies are more expensive than smaller companies.

European stock valuations by sector & factor

Subscribe to Our Newsletters

Sign Up Here

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
ASM International NV614.20 EUR-1.32Rating
ASML Holding NV732.40 EUR-2.09Rating
AXA SA35.25 EUR-0.25Rating
Basf SE45.61 EUR0.27Rating
Capgemini SE163.40 EUR0.93Rating
Dassault Systemes SE35.06 EUR0.75Rating
Deutsche Telekom AG30.33 EUR0.30Rating
EDP Renovaveis SA9.26 EUR-2.11Rating
Glencore PLC380.60 GBX-1.70Rating
GSK PLC1,358.50 GBX0.33Rating
Novartis AG Registered Shares89.36 CHF0.15Rating
Novo Nordisk A/S Class B573.60 DKK4.04Rating
Rio Tinto PLC Registered Shares5,023.00 GBX-1.34Rating
RWE AG Class A29.40 EUR-0.37Rating
Sanofi SA99.02 EUR0.17Rating
SAP SE256.75 EUR0.29Rating
Shell PLC2,695.50 GBX-0.99Rating
TotalEnergies SE56.64 EUR-0.93Rating
Volkswagen AG96.65 EUR-0.21Rating

About Author

Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain 

© Copyright 2025 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures