Monday, August 10, 2015

Economic Summary for the week ended 10th Aug 2015

Sir Isaac Newton taught us that the movement of objects is all about its momentum, and so it seems for equity indices as well. Eurozone earnings are forecasted to come through over the next twelve months, with nearly 5% year on year forward Earnings per Share (EPS) growth, the only index of the three with a positive expected change. Whilst US and EM companies face headwinds from the strengthening dollar and an expected Fed Funds rate hike later this year, Eurozone equities have benefited from the weaker Euro, domestic demand, and a supportive central bank. And because of this momentum, the MSCI Eurozone has risen with considerable velocity: a 20% gain in the past eight months. With improved growth prospects in the region, European equities are likely to continue along this trajectory.

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