The potential for a "great rotation" into European stocks from bonds could be on the way, given low -- or even negative -- yields in government bond markets.
"We think there's over 5 trillion euros ($5.37 trillion) now of cash and bonds that yield nothing, whereas even if you just buy a European index ETF [Exchange Traded Fund] you get a yield of 3.1 percent"
A 1 trillion euro stimulus program from the European Central Bank has helped drive government bond yields lower across the euro zone.
Germany's 10-year Bund yields– the benchmark in Europe – yielded just 0.07 percent on Monday and could dip into negative territory this week, according to some analysts.
European stocks meanwhile have put in a strong performance this year, aided by ECB quantitative easing, a weak euro and brighter prospects for the euro zone economy.
The pan-European Euro STOXX 600 Index has added 18 percent to date in 2015, and surpassed a March 2000 high earlier this month.
"At the end of the day Europe is recovering and European growth is surprising on the upside, we're waiting for earnings to come through to justify the PE [price to earnings] ratio," told David Owen, chief European economist at Jefferies International.
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.