European stock are gaining a lot of attention from U.S. investors. The outlook for the European stocks seems to be heading towards good positions and U.S. investors are liking what they see.
The victory of the centrist, Emmanuel Macron in the recent French presidential election on May 7, easily resulted to a reassuring tide of anti-establishment sentiment that swept across the U.K. and U.S. last year had subsided for the time being.
The improving earning combined and the subdued political risks pushed European equities to experience its biggest weekly inflow as stated by analysts from the Bank of America Merrill Lynch, citing the EPFR data.
The European economy back have regained its balance after losing its footing due to the many events that led to an economic downfall. But at the margin, purchasing managers indexes look better and overall signs of economic activity continue to pick up. The Markit eurozone composite purchasing managers index hit a six-year high of 56.8 in April, which marked the 46th consecutive month for expanding the private sector activity across the region.
European equities also remain cheap in relation with the U.S. with U.S. companies trading at around 22 times trailing to 12-month earnings versus 17 times for European Companies. U.S. stocks have been the primary driver of the global equity market gains in the years since the financial Crisis.
European stocks have already seen gains for 2017, including MSCI Europe index is up around 15% in terms of dollar, versus a 6.9% rise of the MSCI U.S. index.