Old Mutual's Ormiston on where opportunities lie in Europe

Italy remains a risk

European equity markets have enjoyed a strong 2017, boosted by the improving macroeconomic backdrop and benign outcomes in the two headline-grabbing elections in the Netherlands and France.

Meanwhile, the prospect of a defeat for Angela Merkel in September's German elections seems to be fading by the day.  All the while, European company profit margins continue to be driven higher by operating leverage. Having lagged the US since the financial crisis - owing to weaker economic, and therefore sales, growth, compounded by stubbornly low inflation - the broad-based recovery is now providing a handy tailwind and the European Central Bank is doing everything it can to ensure it reduces liquidity only when inflation expectations are firmly embedded.  Back to the equity mark...