Don’t write off European stocks
The Eurozone economy may have slowed to a crawl, but a return to earnings growth has given investors in European stocks hope.
Is the eurozone at a turning point? The bloc’s GDP grew by just 0.1% in the fourth quarter of 2019, the slowest pace in almost seven years, says Elliot Smith for CNBC. Weak German manufacturing has weighed on wider performance and the coronavirus is more bad news for an economy where exports account for roughly 45% of GDP. Yet better survey data and sentiment indicators since the new year suggest that the slump could be bottoming out.
Fabio Balboni of HSBC points out that German wage growth has hit a 20-year high and unemployment is falling across the eurozone, so consumption could be in for a pick-up. That mildly positive outlook is buttressed by extremely loose monetary policy from the European Central Bank, which has cut interest rates and started buying bonds again last September.
For investors the most encouraging sign is a return to earnings growth. European businesses averaged around a 5% contraction in earnings per share during the first three quarters of 2019, according to Morgan Stanley. Yet the fourth-quarter earnings season looks encouraging, with earnings per share on track to rise 2.1% year on year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
And there may be better news ahead. Germany’s January Purchasing Managers’ Index expanded at it quickest pace in five months, reports Michael Searles for City AM. Throw in reasonable valuations, and the region’s equities are hardly a write-off.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Watch out for fake Steven Bartlett video – you could lose thousands
Scammers are trying to tap into the Trump tariffs chaos, but knowing what to look out for could save you thousands of pounds, says Kalpana Fitzpatrick
By Kalpana Fitzpatrick
-
Can Donald Trump fire Jay Powell – and what do his threats mean for investors?
Donald Trump has been vocal in his criticism of Jerome "Jay" Powell, chairman of the Federal Reserve. What do his threats to fire him mean for markets and investors?
By Katie Williams
-
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
By Kalpana Fitzpatrick
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
By Marc Shoffman
-
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
By Ruth Emery
-
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
By Marc Shoffman
-
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
By Andrew Van Sickle
-
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
By Ruth Emery
-
UK recession: How to protect your portfolio
As the UK recession is confirmed, we look at ways to protect your wealth.
By Henry Sandercock
-
Buy-to-let returns fall 59% amid higher mortgage rates
Buy-to-let returns are slumping as the cost of borrowing spirals.
By Pedro Gonçalves