European equities rally seen after ECB action

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Rallies like the one that started in 2009 in the US are rare, but we may see something comparable in European equities. Whilst the US Federal Reserve was flooding the financial system with liquidity, the European Central Bank (ECB) was playing with a garden hose. That’s changing. The ECB is offering inexpensive financing to banks, provided those banks lend to the private sector. That should turn banks from dragging on growth to contributing to growth.

What would I avoid? I’m as nervous about emerging markets debt. A stronger dollar is making it harder for businesses and governments to service dollar-denominated debt. Lower oil prices are sending shockwaves through the finances of some countries as they try to fund social programs with less oil revenue. Lower oil prices are great for consumers but not for oil-dependent governments.


Brian Jacobsen is chief portfolio strategist at Wells Fargo Asset Management

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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