Stronger euro zone; doubting UK

Investors are becoming more and more confident about the sustainability of the European recovery. Although the US economy is getting stronger, there are also more and more signs that the economic recovery in mainland Europe is becoming more solid. In the UK however, uncertainties could resurface when “Brexit” negotiations start, and the road ahead is paved with many political risks.

Although the forthcoming French and German elections are giving global investors pause for thought, almost all indicators – such as the PMI, earnings revisions and global economic data – are supportive.

• ˜Our “super-overweight” on Health Care paid well and this sector stands out as best performer of the month (relative performance of 2.92% vs the MSCI Europe).
• While earnings revisions are positive for most of the Cyclicals space, Materials and the Defensive sectors have turned out negative; this corresponds perfectly to our tactical positioning.
• Technology, our other main overweight, further boosted our performance and remains one of our favourites.
• We lowered our exposure to Materials, in particular Chemicals, which remain complex in Europe.