What is the outlook for European equities at this stage of the business cycle?

    by Steve Cordell, Fund Manager, European Equities

• The European equity market demonstrated its resilience in February. There is ample scope for further share price gains to come as the eurozone recovery gains traction and corporate earnings are poised to show improvement.
• After the surge in PMIs witnessed since last summer, we would expect earnings upgrades to start coming through this year.
• We are close to a turning point in the supply of credit in Europe. Banks have been deleveraging for four years but are now nearing the end of that process and are expecting to increase their loan growth in 2014.
• With the European economy still in its expansion phase, earnings momentum remains the key factor determining share price performance.