Fidelity European Trust PLC (LON:FEV) monthly factsheet for June 2024.
Portfolio Manager Commentary
Continental European equities delivered negative returns in June. French political uncertainty overshadowed the European Central Bank’s (ECB) long-awaited first interest rate cut of the easing cycle. Markets started June on an optimistic note as the ECB reduced its three key lending rates by 0.25%, marking the central bank’s first interest rate cut since 2019. However, the ECB did not commit to a particular rate path and remains cautious on domestic drivers. French equities were particularly weak in June and fell sharply after French President Emmanuel Macron called a snap election following his party’s defeat in the European Union parliamentary elections.
During the month, the Trust outperformed the index. Stock selection across most sectors, notably financials, contributed to relative returns. Gearing was also a contributor over the month. The Trust’s holdings in ASML and SAP were the top two contributors. ASML surged after the company’s Chief Financial Officer expressed optimism regarding strong orders from key client Taiwan Semiconductor Manufacturing Company in the coming quarters. Conversely, beauty products leader L’Oréal experienced a decline after its Chief Executive Officer revised down growth forecasts for the global beauty market in 2024 due to weakness in China. Lack of exposure to Novartis also detracted from relative returns.