There’s light after the tunnel if we take a look at the last data: economic output is improving, more consumer trust and procurement manager index on the rise. “Companies’ profits will soon follow suit,” Britta Weidenbach, Head of European Large-Cap Equities at Deutsche Asset & Wealth, says.
And adds: “Corporate cash positions in the Eurozone are higher than ever before. Profits however remain at around 40 per cent below previous peaks. Equities stand to benefit not least because of improving macroeconomic factors couples with the European Central Bank’s relaxed monetary policy. They are also extremely attractively priced,” explains Weidenbach, who recommends overweighting Eurozone titles.
However, there are still some market watchers who think the stability is temporary and the euro-area is far from healthy.
“Austerity has failed to bring public finances and debt under control. Increases in taxes and cuts in government spending have led to sharp contractions in economic activity, reducing government revenues and increasing welfare and support payments as unemployment rates increase. Budget deficits, while smaller, persist and debt levels continue to rise,” Satyajit Das writes at Market Watch.
Critics underline that while little fiscal room to maneuver and little political will to support a necessary banking and closer fiscal union, Europe won’t be able to breathe normally.