European equity markets could trade higher next week as M&A activity underpins the market and staves off concerns about slowing earnings growth, Klaus Hagedorn, Senior Portfolio Manager at Bankhaus Metzler, tells CNBC.com.
“I would expect M&A to support the market going forward, despite the problems that could be developing, such as earnings growth slowing down in the U.S., and to a lesser extent Europe,” said Hagedorn.
Hagedorn went on to say that considering European markets momentum prior to last March’s correction, there is reason to expect European equities will continue to rise.
“One thing that keeps the bears watching is currencies … if the dollar should push through its old lows, that could spell a bit of trouble for Europe,” added Hagedorn.
Politics will be in focus next week as the race for France’s presidential elections hots up ahead of next weekend’s first round vote.
Nicolas Sarkozy is the rightwing frontrunner of the UMP, while Segolene Royal of the Parti Socialiste is campaigning for the left. François Bayrou of the UDF is also in the running. Only two candidates can secure a place in the second round of the elections scheduled for May 6th. If someone gets over 50 percent of the vote they can win in the first round but this is highly likely.
Earnings season in the U.S. continues with results due out from global bluechips such as Coca Cola, eBay, Citigroup, Ford Motor, General Motors and McDonalds.
Many European firms will also be reporting their figures, including Britain’s Carnival, France’s Accor and Sony Ericsson.
On Wednesday economists will gain clues on the future direction of U.K. interest rates as the Bank of England releases minutes of last month’s meeting which resulted in rates being left on hold.
On the same day Germany’s ZEW index data for March is due, giving investors another chance to assess economic sentiment in Europe’s biggest economy.