Gentle growth looks likely for equities

We remain positive on the outlook for European equities and believe markets will continue to rally from here. This is because equity valuations are still reasonable in comparison with other asset classes and remain attractive by historical comparison. The recovery, however, will be gentle with growth rates of around 0.5% a quarter, but the economic cycle could last longer than it has done in the past. Since inflation has only increased slightly, we believe interest rates - in particular short-term interest rates - can continue to remain low for a longer period. This could prolong the eco...