The sectors where Europe has the advantage

Despite some emerging evidence that Europe's economic prospects may be stabilising, the direction of the region's equity markets remains determined by extraneous factors, notably the progress of ongoing US-China trade negotiations.

The beginning of May saw Q1 European GDP reported at a marginally better-than-expected 0.4%, while eurozone unemployment fell to a multi-year low of 7.7%. The Q1 corporate reporting season, which is drawing to a close, has also been relatively reassuring in terms of the outlook for 2019, although corporates are typically guarded this early in the year in terms of full-year guidance.  Despite this, European equity markets have sold off from recent year-to-date highs and once again appear to be offering reasonable value on a relative and absolute basis, on a forward P/E ratio of 12x and...