European Central Bank plans to wind down quantitative easing

Interest rate hikes to remain on hold for at least a year

Time to read: 2 min

The European Central Bank (ECB) communicated its plan today to wind down its asset purchase program (quantitative easing, or QE) by the end of this year. The ECB announced it would begin a three-month period of “tapering” in October, reducing its bond purchases to 15 billion euros per month from a current level of 30 billion. The ECB said it will continue to reinvest the principal from its holdings for an extended period of time in order to maintain favorable liquidity conditions and ample monetary accommodation. We at Invesco Fixed Income believe this plan should continue to support asset prices and ensure a smooth normalization process.

Interest rates to remain steady

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Europe’s potential finally shows in its performance

European stocks bested the US in 2017, driven by strong earnings growth. What do we see on the horizon for 2018?

Time to read: 4 min

This time last year, the Invesco International and Global Growth team was optimistic about the better relative earnings potential that we saw building in Europe. Indeed, the trends played out to our benefit over the course of 2017. In dollar terms, European equities outperformed US equities by 3% in 2017, the first time since 2012.1 Europe’s performance was supported by healthy earnings per share (EPS) growth. Companies are scheduled to release their fourth-quarter figures over the next few weeks, and consensus estimates expect 2017 EPS growth to be in the double-digits — a level that has not been seen since 2010.1

During the last three months of 2017, Invesco International Growth Fund increased its exposure to eurozone and UK equities, after being net sellers in Europe through the first nine months of the year. To understand the bottom-up stock opportunities we’re seeing, it’s critical to examine the fundamentals of European corporations using our Earnings, Quality and Valuation (EQV) philosophy.

Earnings

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