“People just don’t trust Europe’s economic recovery, especially because the risk of a more pronounced slowdown remains in place,” said Knuthsen, chief investment officer at Saxo Bank’s private-banking unit in Hellerup, Denmark. “Earnings don’t look that great here. You can’t justify that when you have QE, the low euro and -- unlike the U.S. -- profits haven’t been growing. That’s a fundamental concern.”
While the Euro Stoxx 50 is catching up to strategists’ year-end forecasts, it would still need to gain another 8.3 percent to reach the average target. Otto Waser at R&A Research & Asset Management says improving sentiment regarding China and stabilizing oil prices will support the rebound for now, but agrees that investors who have been cautious to join in early will want evidence of a new catalyst for the next leg up.
“We are not going to see the low points we saw in February again, that’s behind us,” said Waser, R&A’s chief investment officer in Zurich. “But we need some fresh news that could drive us higher. We still hope we get some better fundamentals for Europe -- earnings trends have been disappointing. That’s essentially the missing bit.”