CHICAGO, April 28 (Reuters) – Although it’s easy to get
distracted by the turmoil in Ukraine, the trickle of economic
growth in Western Europe continues to boost euro zone stocks and
batter Russian companies. Multinational Western European stocks
should continue to be core holdings in your portfolio.
Things are looking rosier in the countries clobbered the
hardest by the 2008 credit meltdown. As of April 25, the Italy
FTSE MIB Index is up 13 percent this year, followed by a 12
percent gain in Portugal, almost 8 percent run-up in Ireland, a
5 percent increase in Greece and 4 percent recovery in Spain.
Among the negatives: Unemployment, deflation and tight
credit continue to be problems in these countries, even if they
are gaining ground on repairing their fractured banking systems.
Also, stock markets in The Netherlands and Germany are down
slightly this year (through April 25).
Independent of the Russian turmoil, there are concerns about
deflation in the euro zone and a strong euro. European Central
Bank President Mario Draghi said on April 24 that weaker
inflation could trigger a round of asset buying by the bank. The
rising euro also has the rapt attention of central bankers.
“The euro is too high,” former ECB president Jean-Claude
Trichet said on April 23 in Chicago while speaking at the
Chicago Council on Foreign Affairs. Troubled by weak economic
growth in central Europe, Trichet noted “clearly we need to
elevate growth potential through structural reforms.”