Gartmore News in Brief

Roger Guy and Guillaume Rambourg, managers of the Gartmore European Absolute Return Fund, see a positive outlook for Europe's market over the next quarter

"Following the worst recession in 60 years, we expect 2010 to mark a further period of recovery in Europe, albeit a modest one", say the managers.

"The economic environment continues to be supportive of a positive outlook, illustrated by a stronger than expected December US ISM (Institute for Supply Management) Manufacturing Survey - a leading indicator of economic turnarounds, and positive global GDP expectations".

Although Roger and Guillaume are maintaining a positive outlook for European equities over the next quarter, they remain cautious over the longer term and cite a number of instances which could derail the recovery.

"The global economy is still exposed to the threat of sovereign risk and we are reminded of the massive debt still outstanding after the Dubai World debt default and Greek fiscal crisis.

Recent payrolls data in the US has been somewhat ambiguous, with December data slightly disappointing.

Other risks to Europe's recovery include the withdrawal of emergency liquidity by major central banks and government institutions, and rising bond yields".

Roger and Guillaume conclude that there are obvious disparities between countries in the Eurozone which means that they do not expect a homogenous recovery however, based on recent leading indicators of economic sentiment, the near term outlook for Europe is encouraging and European equity valuations remain compelling.

The managers are maintaining a broadly neutral stance between cyclical and defensive stocks with a view to re-evaluate this strategy over the coming weeks.

Back to top