'Dismal' eurozone data sparks concerns
European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Is Europe heading for another economic breakdown? Euro stock markets struggled this week after dismal economic data from France and Germany added to lingering worries over the Ukraine situation.
The latest figures could build up pressure on European Central Bank chief Mario Draghi to boost intervention in the region to help countries avoid following Italy's recent unexpected slide into recession.
"The eurozone is staring recession in the face once more," warned Ben Brettell, senior economist at Hargreaves Lansdown. "Mario Draghi needs to make good his pledge to 'do whatever it takes' and embark on a quantitative easing programme. Indeed the French Finance Minister has released a statement urging the ECB chief to act."
Mr Draghi launched stimulus measures in June and would prefer to wait longer to give them the chance to have the desired effect, but more bad news could force his hand.
"We're two years on from Draghi's 'whatever it takes' speech and a huge amount of reform has been undertaken," pointed out Tim Stevenson, director, European specialist equities at Henderson.
"Nonetheless, growth seems to be plateauing, and we remain in a pretty low-growth environment. Europe still faces significant problems."
But he added that he believes that European valuations remain reasonably attractive, while profit margins still have a lot of room to improve.
Juliet Schooling Latter, research director at investment funds rating agency FundCalibre, warned: "Europe is no longer the raging bargain it was a couple of years ago, but it still isn't expensive.
"Having said that, there are headwinds. For starters, earnings are very depressed and we do need to see them improve in order for the market to continue to do well.
"Meanwhile, deflation remains a big threat. Even Germany has below-target inflation, and this is constraining economies. Profit margins are also quite low, but this means any pick-up in the domestic economy should boost domestic-facing stocks."
Looking ahead, there are certainly a rocky few weeks to overcome, but further ahead, experts are more confident. "In terms of the potential for European equities, we think corporate earnings should recover from here," said Andreas Zoellinger, co-manager of the BlackRock European Equity Income fund.
"Market expectations for earnings growth have moderated significantly since the start of the year and are now much more realistic. We maintain our projection of 8 per cent earnings growth this year in Europe."
Wouter Sturkenboom, Europe strategist at Russell Investments also remains positive. "European equity markets have experienced something akin to a summer of discontent, started by problems in the Portuguese bank Espirito Santo and continuing unrest in the Ukraine.
"Our European economic growth expectations lowered following the recent sanctions and countersanctions, although not to such an extent as to change our modestly positive outlook on equities."
But Eoin Walsh, portfolio manager at TwentyFour Asset Management advised caution. "We now have a market where many sectors are trading at expensive levels compared to historical averages. but while the ECB continues to provide support and cheap money, spreads are likely to tighten further and bonds are likely to get even more expensive.
"But this support will not continue indefinitely and investors need to remember that cheap financing will eventually end and corporates will have to be able to afford debt at more reasonable levels."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Pension mortgages: 'The advice I was given was wrong and now I face losing my home'
Best savings rates are not all they might seem
Questions of Cash: I checked in with Air France in time and still missed the plane
Minister's pension promise to firefighters challenged
Gold-plated pensions – the key to retirement freedom?
- 1 PlayStation and Xbox hacked by Lizard Squad
- 2 Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
- 3 The Grace Dent Christmas Questionnaire
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 Vagina canoe artist defends herself over ‘obscenity’ charges
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens