Morgan Stanley downgrades European energy stocks due to the Hormuz Strait agreement.

As oil prices fall and shipping through the Strait of Hormuz gradually returns to normal, Morgan Stanley strategists have downgraded their rating on European energy sector stocks. The research team led by Marina Zawolok has lowered the rating on the sector from overweight to neutral, citing that after geopolitical tensions peaked, the energy sector typically underperforms the broader market. The strategist has removed six energy stocks from the European preferred stock pool and replaced them with three banks, two utilities, and one copper company. Analysts say that the European stock market has not fully digested the positive news of the resumption of shipping through the strait and investors may now turn their attention to a potential peace agreement in Ukraine.