Olivier and Mann – Earnings are projected to advance in 2017 as growth increases, the euro slips and commodity prices rise according to Bank of America who upgraded their projections for this year’s European earnings by over 10%.
This year’s growth has shown signs of sustained momentum as the official manufacturing data at the start of the year indicated growth and reached a five-year and a half year high.
The end of 2016 U.S. records showed manufacturing data had outstripped projections with the PMI data showing buoyant performance. The positive performance of the European economy was fueled by the strong numbers for retail and economic sentiment.
Observers said that the bullish commodity prices have made European earning prospects attractive.
The bank had already projected earnings to grow by 8% in 2018, adding that the realisation of their projection for both 2017 and 2018 would make both years the best for European earnings since the onset of the global financial crisis. The bank suggested that a balanced portfolio comprising banks, pharmaceuticals, autos, and utilities would be the sectors to look out for in the upcoming twelve months.
The positive outlook for the bank’s fixed income forecasts for 2017 is still relatively marginal, and with the equity market having already taken a good part of the profits for the current year, the bank still believes that this balanced trend will carry on.
With the U.K. market still trying to disengage itself from the European Union, analysts suggest that technology and healthcare will be areas with lots of activity in the near future.
Analysts also said that competition has become more intense since private equity owners still want to own businesses that have been performing well, but only after they have taken into account possible Brexit fallout over the next three to four years.