RLAM's Lilley: Tightening credit spreads lifting equities

European equity markets have switched from a "vicious cycle to a virtuous cycle" due to loosening credit conditions, according to RLAM's Kevin Lilley.

Lilley notes that in the past two years, ever widening credit spreads have had a big drag on European equity markets. "It is no coincidence that equity markets turned for the positive when credit spreads peaked in March this year," he says. "Since then the cost of debt refinancing has been falling almost on a daily basis, allowing companies to focus back on their core businesses and removing some concerns over solvency for investors.” Lilley believes loosening credit conditions are at the heart of improving share prices. He says this continues to be fed by the current results seaso...