- After a stellar 2017, European equities have disappointed investors so far this year.
- Global trade disputes, a divisive political backdrop and slowing economic growth are pressuring markets.
- We see more challenges and uncertainty on the horizon for 2019.
What happened to the enthusiasm for European equities in 2017? The election of reform-minded President Emmanuel Macron in France, the staying power of Chancellor Angela Merkel in Germany and signs of improving economic growth in the eurozone supported double-digit gains in European stocks. European markets appeared, finally, to be set to reverse a years-long period of trailing behind a powerful U.S. bull market.
This year, those hopes have faded. Amid investor worries over global trade skirmishes, the trade-oriented European economy has slowed appreciably. The political scene in several key countries has tumbled into turmoil. And European stock markets have reflected this unfortunate turn of events, failing to keep pace with U.S. stocks yet again. Here are three underlying issues contributing to the dislocation in international markets: