You are here: Home - Investing - Experienced Investor - News -

Outlook for Europe not dampened by ECB’s ‘disappointing’ actions

Written by: Adam Lewis
Despite the European Central Bank disappointing markets with yesterday’s announcement of an extended Quantitative Easing programme and a cut in the deposit rate, the outlook for Europe remains positive says Axa Wealth’s head of investing Adrian Lowcock.

Yesterday’s announcement saw the €60bn a month QE programme extended a further six months till April 2017, while the deposit rate was reduced 10 basis points from -0.20% to -0.30%. Markets had been expecting a 20 basis point cut in the deposit rate, and at least €20bn added to the asset purchase programme.

Lowcock says: “Mario Draghi [pictured] has a reputation of giving markets more than they expected. This time though he disappointed. It was this disappointment that led to the over-reaction in markets yesterday. Many had hoped Draghi would surprise the markets with a shock and awe announcement.”

Despite this he adds the outlook for Europe remains positive, with business and consumer confidence rising and economic PMI (Purchasing Managers’ Index) data being resilient.

“Whilst the euro has initially strengthened against other currency’s it could quickly reverse if the US Fed announces its first interest rate rise in nine years on 16th December,” he says.

“European stocks continue to trade at a discount to their US peers, have superior earnings per share growth and benefit from lower interest rates.  At these levels the  European stock market looks attractive for long term investors.”

In terms of fund ideas in this current environment, Lowcock picks out John Bennett’s Henderson European Selected Opportunities fund, and James Sym’s Schroder European Alpha Income fund.

“Bennett pays close attention to the wider economic picture and sector trends,” says Lowcock. “He believes this is essential to get performance from Europeans large companies.  His focus is on companies which have a discount to their intrinsic value.

“Sym uses a business cycle approach taking into account the wider economic climate and market sentiment when picking individual stocks.  There is a tendency towards value stocks but this will vary with where Sym believes we are in the economic cycle. The cyclical stock picking strategy should benefit investors most in rising market and is designed to take the most advantage of the European recovery.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week