Market volatility fading as likelihood of Macron win strengthens

French elections later this month

Since the financial crisis, the eurozone has been in the midst of a struggle between deflationary and reflationary forces.

When European Central Bank (ECB) president Mario Draghi hinted at an asset purchase programme in 2014, we began making the case that reflationary forces would win. By and large that thesis has played out, although the impact on eurozone growth has been larger and more reliable than the impact on markets. Managers warn unwinding European QE could burst 'the mother of all bubbles' However, we expect that gap will close over time and markets will catch up, keeping us positive on eurozone assets. Against this backdrop, eurozone equities are considered neutral value in an absolute se...