Many commentators were hyping up Europe, with a big 2018 expected to be on the cards. The Eurozone expanded by 2.5% in 2017, which was the fastest rate since 2007 and populist anti-systemic parties seemed to be on the back foot after the French and Dutch election results.

The IMF had predicted  growth of 1.9% for 2018, adding to the positive picture. Since the start of the year, European equities have performed far worse than in 2017. While most asset classes have not performed well in the first quarter, European equities have performed amongst the worst. 

PMI data is now starting to miss expectations, pointing to a slow-down in manufacturing growth, one of the strong points for Europe last year. 

James Bevan of CCLA Investment Management commented on this: ‘The tone of domestic Europe is weaker than had been anticipated and clearly the trade worries are a compounding factor.’

In addition to manufacturing, earnings forecasts have also halted their impressive growth, flattening. 

The Italian election has also been a factor as both Lega Nord and the Five Star Movement are populist, anti-systemic parties that may form a ruling coalition. In addition, the emphatic re-election of Viktor Orban's Fidesz party in Hungary strengthens the ranks of EU sceptical parties in Europe.  

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 Information is based on our current understanding of taxation legislation and regulations which is subject to change.