Our activity indicator fell into negative territory in February (-0.4), because of weaker economic indicators in all regions we cover, except for the USA. Barring investment, all components of our barometer saw declines of varying extents. Our inflation indicator fell sharply, from +1.1 in January to -0.3 in February, its lowest level since May 2017, partly due to lower oil prices.
After taking a beating over the past few days, European equities should be well placed to take advantage of a rebound in world markets. Most specialists expect one, despite the instability of the past few days. In theory, all of the factors necessary for outperformance are in place: European stocks lag their worldwide counterparts, bond yields are still mostly negative on maturities up to five years – the lowest on the planet – and the economic outlook is favorable.
That said, with the German market relatively dear, bank stocks still suffering from low interest rates and many sectors well on their way to making up their lag, the range of attractive investments is limited. It’s not yet clear that Europe will fare better than the other regions of the world.