UniCredit Research Hub

UniCredit research highlights a stark divergence within the Eurozone manufacturing sector, where high-tech industries have grown 30% post-pandemic while traditional segments like automotive and chemicals have declined by 7%. This industrial strain is exacerbated by a muted fiscal response to recent energy shocks, with government support measures totaling only 0.1% of GDP compared to 3% in 2022. Consequently, economic indicators remain weak, with the Eurozone composite PMI expected to fall to 48.5 as services and manufacturing both face high input costs. In equity markets, analysts observe an earnings-driven structural boom in global IT, where massive returns in the US and Emerging Markets are underpinned by robust profit growth rather than speculative bubbles. However, the surge in capital expenditure by tech giants—potentially reaching $1 trillion by 2027—has led to record euro-denominated bond issuance, prompting a recommended underweight position in corporate bond portfolios due to increased debt levels and rate sensitivity. Finally, in Central and Eastern Europe, political shifts in Hungary have led its 10Y government bonds to outperform Poland's by 30bp, as investors bet on ambitious euro adoption plans and structural reforms.