LONDON, U.K. – European equities are shining with most sectors in the green this year heading into December.
The Euro equities are looking at about 21% increase this year, showing every sector in the market in green, including the banks. Four industry groups are recording about 30% of gains for this year.
European equities are on the way to having the best year in the market since 2009, in the wake of the global financial crisis. Various national markets that have been struggling a couple of years ago including Greece and Italy are also showing great performances.
The Stoxx 600 has already marked about 3.2% gains the previous month, and November is suggesting another good month to end 2019 in. Overall, the index had only two bad months this year, which is a rare occurrence and only happened twice in the last 20 years.
2019 has been a risk-off year for the European market. Globally, the market flows have reached to about $553 billion to cash, $353 billion to credit, $188 billion to equity, and $51 billion went into the government bonds according to strategists from the Bank of America. The recent improvement in the equity flows is a bit light against the declines sustained last year.
Although the Stoxx 600 has recorded about 20% lower on shares this month compared to the massive gains sustained in October, December might provide the market with some catalysts for a boost. DAX has also tracked positive gains recently while the GDP for Germany came out with optimistic surprise, which powered up the country’s market and saving it from a possible recession.
According to Sylvain Goyon, a strategist at Oddo BHF, the most visible accelerator for the market growth is in Britain as the current polls predict for the Conservative party’s landslide victory. If the polls should materialize, it could be the trigger that the European market is waiting for to help get over the risk aversion that has affected the major indices in the UK, says Goyon.
Still, there are some persistent unknowns such as the US-China tariffs set to take effect on December 15. Strategists at Barclays said that the recent rally in the market is most likely powered by the increasing expectations on reduced policy uncertainly and improving macro.
If the rising framework of the macroeconomics and geopolitics doesn’t collapse, equity markets in Europe have a high potential for a mid-to a high-single-digit increase according to analysts.