European stocks closed for the fourth month in a row

European stocks posted gains for the fourth month in a row as confidence in the region’s economic recovery grew, and the vaccination program accelerated.

MSCI shares in Europe have risen nearly 4 percent since the end of April, bringing its annual earnings in US dollars to 12 percent. Courses in Frankfurt, Paris, Madrid, Milan and London have risen this month.

Although the EU vaccination program lags far behind other regions, efforts by major countries to accelerate the spread have boosted traders’ confidence. At the same time, economists predict strong economic growth this year.

As a sign of improving forecasts, a recent study by the European Commission on the Economic Outlook Index released on Friday showed that confidence in the eurozone in May was “significantly higher than its long-term average pre-epidemic level”.

The ESI data “confirm that the eurozone economy is rapidly recovering from the blockade as vaccines are being collected as the summer season approaches,” said Daniela Ordones, an economist at Oxford Economics.

In Spain և Italy, two countries hardest hit by the peak of the coronavirus crisis, stocks worked particularly well this month. MSCI և Spain և Italy indexes up about 6% in dollar terms for May. The return was flattened by the strengthening of the euro against the dollar this month.

Investors և economists have a similar view of the UK, where coronavirus vaccines were spreading faster than in continental Europe և the government has removed many social curbs.

“We continue to believe that UK stocks value global investors,” said Sharon Bell, Goldman Sachs’ European strategist. “Since the beginning of this year, we have seen the strongest influx of foreign investors into UK stocks, at least since 2016.”

The MSCI UK Index rose 3.4 percent in May, driven by a strong rise in the pound against the US dollar.

Investors say stocks in the UK and mainland Europe also look more expensive than on Wall Street.

According to Goldman Sachs, MSCI’s European stock index is trading about 17 times higher than expected next year. Over the past 10 years, this is higher than average, but much more expensive than US stocks, which sell more than 23 times the projected profit.

The price-to-earnings ratio chart shows that European markets are trading at lower prices than the US

The Bank of America said in a post last week that it remained “positive for European stocks” even after a sharp rise this month. The bank has offered customers “overweight” positions on stocks that tend to be economically viable, such as banks and sellers of luxury goods, as the region’s economic recovery accelerates.

Trading was suspended on Monday, with the United Kingdom and the United States closed for public holidays.

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