Europe, a revival of activity on the financial markets

Euro bandiera

In addition to these extreme risks, the fundamentals are also strengthening: investment is picking up, profit prospects are improving, bank loans are up sharply… The economic situation in the Euro zone is becoming clearer and investors are showing renewed confidence. In the first quarter of 2017, European equity market continued the upward trend initiated at the beginning of the second quarter of 2016.

market

Earnings revisions have marked a positive turnaround in Europe over the past six months. The consensus forecasts a 14.2% increase in results in 2017 for the whole of the European market and a continuation of this trend in 2018 with an expectation of a 9.9% increase. In this context, the dynamics are given:

Fabrice Masson, Director of Equity and Convertible Management at BFT Investment Managers, maintains his preference for European markets.

“At the euro zone level, we have strengthened our positions in Germany and the Netherlands”

However, the reality is more nuanced, with the anticipated figures for economic performance taking a long time to be confirmed. Growth is struggling to take off: 1.70% in Europe in 2016 and 1.80 to 2% in 2017. In the United States, after a small 1.60% in 2016, there is great uncertainty about 2017.

In addition, American households, after the subprime crisis, are shifting their income increases towards savings. The same is true in China, where the growth of industrial activity is struggling to maintain itself. Moreover, this country is turning on itself by now favouring domestic consumption. Finally, the difficulties of these two countries (the United States and China) are bringing with them emerging countries and slowing down their economic dynamism.

Their situations could deteriorate further with a possible drop in the dollars intended to stimulate American exports penalized by a dollar “clearly too expensive” according to Daniel Gérino, Chief Executive Officer and President of Carton Sélection. Caution should therefore remain on the equity markets and the question is whether Europe will be able to escape its dependence on the American markets.

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