Despite the bond sell-off in late April and now a new wave of correction with the 10-year Bund yield almost touching 1.0% this week, dragging equity markets down in its wake, Societe Generale maintains a positive long-term stance on eurozone equities.
Despite a potentially volatile environment through H2 the Fed is likely to finally normalise its monetary policy. Also, the M&A cycle humming in the background, cash-rich companies are poised to start shopping in Europe as soon as a solution to the Greek crisis is found.
The recent increase in cross asset correlation and in particular between developed market equity and bond prices reflects the changing market environment.
"We expect eurozone equities to continue to deliver a strong performance (Eurostoxx 50 target of 3800 by end 2015), driven monetary policy changes, investment plans, a weaker euro and better economic newsflow. Despite the corrections that followed the two recent bond sell-offs, from a longer-term perspective, we stick to a positive stance on Eurozone equities." said Societe Generale
