Europe’s new golden age? - November 26, 2017

Europe’s new golden age?

The euro-zone had its strongest period in a decade, and the whole EU may head towards a new golden era. This is great news since the financial crisis took its toll on the EU and it has several problems on its own too. The European Commission also raised its growth forecast, but there are some uncertainties.

“The 19-nation euro-zone bloc is already enjoying the strongest growth in a decade”, writes Bloomberg mentioning that the Credit Suisse Group AG and Oxford Economics are “declaring that it’s heading toward a golden period of low-inflationary expansion”.

This may be very good news for the European Union since it had a rather hard time during and after the crisis. Or as Bloomberg puts it: “The turnaround is striking for a region that plunged from the global financial crisis into its own sovereign debt turmoil, record unemployment and near-deflation that threatened the very survival of the currency union”.

Things are good but not perfect

We also wrote about the problems of the EU several times. Some of the euro-zone countries are having serious financial problems, like Greece. The UK voted to leave the EU as well. Many expected this to have serious consequences for the EU, but so far, the British seem to lose more on their referendum and snap elections after that.  The UK still didn’t manage to get a proper plan on how to leave the European Union and that is clearly hurting them.

So, against all odds the EU is doing more than just fine. Both in Germany and France pro-EU forces won, so there’s no imminent danger for the union from those countries. Angela Merkel, German chancellor however faces a hard time after her problems with coalition talks. There are some other things that can go haywire and shocks may happen. The strengthening voices of euroskeptics around the zone with the strengthening populists everywhere, even in Germany, may cause problems in the EU, and the Spanish – Catalonian fiasco may also go even worse.

Stocks are doing good, too

The European Commission, however, raised its growth forecast to 2.2% from 1.7% this month which is great news for the EU. As it can be seen from Bloomberg’s chart, European stocks are also doing great.

European stocks

However, this is still below the rates of the US and the UK, so there’s room for improvement.  What’s more, stocks are having their prime in the US, too. Optimism is unbroken there, and day by day old records are broken with the constant hike of the prices in the United States. Still, many expect a correction in the US stock markets, while some believe that the EU can now face a new golden era.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.