"For the first time in several years, European equity earnings are increasing throughout the course of this year rather than decreasing and the biggest technical argument for that is the fact that 60 billion euros ($72.29 billion) exited European equities in the past two years, 20 billion euros ($24.09 billion) of that are back in, there's still 40 billion euros ($48.18 billion) waiting on the sidelines," she noted.
European companies reported a 25 percent profit growth in the first quarter of 2017. Furthermore, the Stoxx 600 has been on the rise since the start of the year by about 1.7 percent (Tuesday was a particularly difficult day for stocks after North Korea sent a missile over Japan) as investors have switched their positions from the U.S. into a more politically-certain Europe. As the election calendar in Europe has cleared and political risks dissipated, money managers have flocked to European stocks at a time when the policy direction in the U.S. became more unclear.
At the same time, the European economy has been growing and showing signs of recovery. Official data from the European statistics office showed earlier this month that the euro zone grew at a pace of 0.6 percent in the second quarter of the year, after posting a 0.5 percent growth in the first quarter.
The performance of European companies, the reduced political risk, and the economic momentum have convinced money managers. The CBOE Volatility Index, commonly referred to as the VIX, hit its lowest level since 1993 in May after President Emmanuel Macron was elected in France.