The Eurozone Stock Rally Has Legs
Wall Street Journal - almost 2 years
The 30% rally in European stocks is grounded in solid fundamentals, Chief economics commentator Greg Ip says.
Ludovic Marin/Agence France-Presse/Getty Images
Given the eurozone’s propensity for shooting itself in the foot, the 30% rally in European stocks since last October’s low may look excessive.
But as the latest Capital Account column points out, the rally is grounded in pretty solid fundamentals: highly stimulative monetary policy, an end to austerity, a cheap currency and low oil prices.
Indeed, Angel Ubide, a former hedge fund manager who is now with the Peterson Institute for International Economics, argues the eurozone economy is likely to significantly outperform expectations. Since European stocks aren’t expensive, the rally probably has further to run.
The International Monetary Fund thinks the eurozone will grow 1.5% this year, an upgrade from its prior forecast of 1.2%. But as Mr. Ubide notes, that’s actually equal to the region’s long-run potential g
Wall Street Journal article