As the US stock market edges past the February 19th peak (3386.2), the focus may switch to the global laggards. The US has at times struggled to deal with Covid-19, but it has the technology to help countries adjust to the pandemic. Europe has no obvious trailblazers: the STOXX 600 remains well down from the February 19th high.
The Eurozone faces another challenge: the rapid growth of renewables, with costs tumbling anew, will provide a boost for EVs. Tesla has first mover advantage, reflected in the rise of the company’s share price. Victory by Joe Biden in the November presidential election will accelerate the shift to EVs in the US. On this score, as well as big tech, Europe has been left behind.
However, Eurozone policy makers have set their stall out, with a welcome focus on green initiatives. The structural challenge posed by US tech has not stopped the Euro rising sharply against the dollar in recent months. The trade-weighted euro is close to the all-time high set in October 2009.
The EU’s “Green Deal” marks a decisive step. The European Innovation Council (EIC) is providing Eur300m funding for start-ups. Pick of the recipients must surely be aviation start-ups: the US may have stolen a vital lead in EVs, but Airbus has forged ahead of Boeing in the past two years. Hybrid passenger jets could seal the EU’s current advantage in aviation.
Summary
• Tesla, US tech in the ascendency
• But Green Deal will boost energy start-ups
• And support rising euro
