T. Rowe Price: European Stocks Have Higher to Climb

Dean Tenerelli says investors should expect further gains from European companies, especially telecoms and banks

T. Rowe Price 14 November, 2017 | 12:30PM

The only real political risk now is the UK, where Brexit talks are deadlocked

Sentiment towards European equities has been on the rise this year. As the European economy continues to recover, investors have been buoyed by sustained earnings growth and a perceived reduction in political risk. We believe this should help counter any tightening of monetary policy, which will probably be modest, as well as the impact of a stronger euro.

The political uncertainty caused by a populist resurgence at the start of the year has receded, following the victory of centrist Emmanuel Macron in the French presidential election in May. Although German Chancellor Angela Merkel won a fourth term in office with a substantially reduced majority, she should make the necessary compromises to allow her to form a workable coalition. We also believe a solution will be found to defuse the Catalonia crisis.

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T. Rowe Price  T. Rowe Price is a global investment management firm dedicated to helping clients achieve long term success.

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