Deutsche Bank goes neutral on US vs. Europe stocks after Iran peace deal

Deutsche Bank Shifts to Neutral on US vs Europe Equities After Iran Deal

Deutsche Bank cut its relative preference for U.S. over European equities to neutral on Monday, citing the receding risk of a prolonged closure of the Strait of Hormuz following the U.S.-Iran peace deal announced over the weekend. The move marks a reversal from the bank’s stance earlier this year, when strategist Maximilian Uleer had expressed a clear preference for U.S. stocks over European counterparts on a three-to-six month horizon.investing

Geopolitical Risk Repriced

The shift comes after the United States and Iran reached a preliminary agreement on Sunday to end their nearly four-month conflict, with Pakistan’s Prime Minister Shehbaz Sharif announcing that a formal signing ceremony will take place Friday in Switzerland. President Trump confirmed the deal on Truth Social and authorized the “toll-free reopening” of the Strait of Hormuz, a chokepoint through which a substantial share of global energy shipments flow.cnbc

The prospect of normalized oil flows has already sent crude prices sharply lower and lifted European equities, with the Stoxx 600 gaining 1.9% on Friday as banks and travel stocks led the rally. Deutsche Bank’s own shares rose 6.6% in the move.reuters

Credit Strategists Flip Euro vs Dollar Preference

Separately, Deutsche Bank’s credit strategists moved to underweight euro-denominated corporate bonds relative to U.S. dollar credit. The bank had previously favored euro credit over dollar credit, but now argues that the aftershocks of the Iran war — including lower energy prices and reduced inflation pressures in Europe — are playing out faster than AI disruption risks that had weighed on parts of the U.S. credit market.dbresearch

The dual repositioning reflects a broader reassessment of how geopolitical de-escalation reshapes cross-asset allocations. With European equities already rallying near record highs on peace optimism, and U.S. Treasury yields retreating on lower oil, Deutsche Bank’s strategists appear to be signaling that the easy gains from the peace trade in European markets may already be priced in — while U.S. credit now offers better relative value as AI-related concerns fade.home

Iran has yet to formally confirm all terms of the agreement, and Trump warned Sunday that military action could resume if nuclear negotiations during a planned 60-day follow-up period fail.nytimes