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SWINGS AND ROUNDABOUTS

We spotted the green shoots a couple of months ago, and the trend has persisted: European equities again top fund selector buy lists. Appetite for US equities, however, has vanished as quickly as it surfaced in the wake of Trump’s election victory

Market intelligence

Macroeconomic sentiment and appetite for European equities are now both at their highest levels in two years. There tends to be a correlation between the two because of the strong exposure that European equities have to the European economy, relative to other asset classes.

And, when macroeconomic indicators in the eurozone improve, as they have in the past couple of months, European equity sentiment rises accordingly. With inflation finally edging up towards the European Central Bank’s target, and economic activity in the eurozone at a multi-year high, the case for European equities is fast becoming a compelling one.

Exactly half of Europe’s fund buyers are now planning to increase their allocation to the asset class over the next 12 months, up from less than a third at the end of last year (see graphs to the right).

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