<div id="readability-page-1"><div><div><div>Key points:<ul><li>STOXX 600 up 0.9%</li><li>Banks lead</li><li>Cenbank meetings eyed</li><li>Nasdaq futures edge up</li></ul></div>EU STAPLES: MS SEES DIFFICULT 2026, SELECTIVE BRIGHT SPOTSEuropean consumer staples are set to close 2025 on a sour note, underperforming MSCI Europe by 10% and ending the year broadly flat. Next year might not look much better.&#34;We expect more of the same in 2026,&#34; write Morgan Stanley analysts, noting the valuation gap versus U.S. peers remains near record levels, with EU staples trading at a 30% discount.They expect the trading environment to stay difficult, at least in H1, as Europe shows clear signs of a softening consumer and inflation continues to strain household budgets.&#34;All in… following several years of elevated food inflation, we see the consumer basket still somewhat strained, making for a more difficult pricing environment in 2026.&#34;Commodity price pressures and concerns over alcohol consumption could weigh on margins for beverages and food players, while balance sheets stay under scrutiny.Against this backdrop, MS says stock-picking remains key, though H2 could offer easier comparatives for some.The bank prefers Household &amp; Personal Care and Tobacco. Haleon becomes the new HPC top pick, ABI leads in beverages, and Danone remains the favourite in food. Unilever returns to overweight, while Reckitt is cut to equal weight.</div></div></div>

DANOY

COST

Morgan Stanley analysts predict a challenging 2026 for European consumer staples, expecting them to underperform MSCI Europe by 10% and remain flat. The valuation gap with U.S. peers is near record levels, with EU staples trading at a 30% discount. The difficult trading environment is attributed to a softening consumer and inflation pressures. Stock-picking is crucial, with Household & Personal Care and Tobacco sectors preferred. Haleon is the top pick in HPC, ABI in beverages, and Danone in food. Unilever is upgraded to overweight, while Reckitt is downgraded to equal weight.

EU staples: MS sees difficult 2026, selective bright spots