S&P Dow Jones: Positive start for European equities

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The European equity markets have been having a ripping year so far and the S&P Europe 350 added a further 6.9% during February, bringing the year-to-date return to 14.7%, Tim Edwards, Senior Director, Index Investment Strategy, S&P Dow Jones Indices revealed.

“While the rolling news channels occupied themselves with the admittedly engrossing (and moderately successful) negotiations between the Eurogroup and the new Greek government, signs of real wage inflation in Germany and a fast-recovering economy in Spain were perhaps more important in boosting sentiment,” Edwards highlighted.

“In an indication that such positive sentiment was broadly applied, every single one of the S&P Europe 350’s ten sectors finished in positive territory, as did the component contribution from every country in the index. The UK’s outsized contributed was exaggerated by currency movements; the euro continued to weaken over the month and closed at a seven-year low versus the pound.”

Negative yields made the headlines last month, but in February they became commonplace among top-rated sovereign and corporate issuers. The yield on our S&P Eurozone Sovereign Bond Index fell further to a paltry 0.57%; the equivalent yield in the 1-3 year index fell to a barely-positive 0.03%.

The commodity markets seemed to find a bottom in February – the S&P GSCI recorded its first gain in seven months with Energy gaining 7.3% – and it is no surprise to see Materials accompany Energy as the best performing sectors of the S&P Europe 350.

In our strategy charts, the S&P Europe 350 Buyback Index jumped into the lead for the year with a highly commendable 8.4% return for the month. In period of outsized returns in the broader market, defensive investment styles such as Risk Control and Low Volatility lagged. The S&P Europe 350 Quality Index remains the leader on a 12 month basis.


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