Dan Morris, Global Market Strategist, J.P. Morgan Asset Management said the poor value investors were getting in bonds was likely driving more people into stocks.
"There is the argument that the stock market is anticipating the recovery, but I don't think that is what is happening here, it is more of a reflection that there is not much value to be found in fixed income at the moment," he said.
"One factor influencing the performance of stocks in Europe is the perceived country risk. A high dividend yielding stock in Spain is likely to perform differently than a stock with an equivalent yield in Germany," said Morris.
"In Q1, when the U.S. market gained 10 percent, Europe advanced just over six percent, even though the higher dividend yield on the European index (3.7 percent vs. 2.2 percent), should have made it more attractive," he said.
Morris said if you separate country risk (measured by 10-year government bond yields) from dividend yield, generally the highest returns are associated with countries with comparatively low country risk, such as Germany.
—By CNBC.com's Jenny Cosgrave. Follow her on Twitter