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.
-
The 30 house price hotspots
While we have seen house prices sliding, these sought-after locations have seen prices jump by at least 5% over the previous 12 months
By John Fitzsimons Published
-
Working parents will be entitled to 15 hours free childcare for two-year-olds from next year
The government has extended free childcare hours to working parents of two-year olds but it won’t be automatic so make sure you don’t miss out
By Marc Shoffman Published
-
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 Published
-
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 Published
-
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 Published
-
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 Published
-
Best investing apps
We round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
By Ruth Emery Last updated
-
The top funds to invest in - November 2023
Tips Investors are focused on income strategies and FTSE heavyweights. We look at what investors have been adding to their portfolios in the last month
By Vaishali Varu Last updated
-
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 Published
-
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 Published