Welcome to Thoughts on the Market. I'm Graham Sekker, head of

more understanding's European and UK equity strategy team. Along with my

colleagues bringing you a variety of perspectives, I'll be talking about the

pace of COVID recovery in Europe and the effects on equity markets. It's Tuesday,

April the 27th at 3pm in London. If you're a regular listener to the podcast, you

may have heard my colleagues Mike Wilson and Andrew Sheets mention what we

believe is an ongoing shift from an early cycle to a mid-cycle economy,

particularly in the US. However, in Europe, elevated numbers of COVID cases, new

economic lockdowns and a slow pace of vaccination likely delay this shift. In

fact, negative headlines around the pace of recovery have helped feed a

perception that equity investors should avoid European equities. But if you take a

closer look, you'll see the reality is a bit different. The truth is, European

equities have actually performed as well as US stocks this year and have

actually outperformed EM and Japanese stocks quite significantly. Is this a

fluke? We think not, and we see four reasons why European equities could

continue to outperform global peers. First, despite the negative headlines, the

economic data across Europe is coming considerably better than expected. This is

especially true in the manufacturing sector, which benefits from the strong

global recovery. That said, we are also seeing the more domestic services sector

form better than feared, despite the imposition of new COVID-related

lockdowns. Looking forward, one consequence of the initial delay in Europe's

recovery is that there is further room for improvement in some of the key

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