Europe becoming more correlated to US market

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Roger Guy, Gartmore

Following a strong rally last year in Europe, the question for European investors is whether or not it can be sustained. In the first place, Europe has become increasingly more correlated to the US and is driven by whatever happens there, with the same sectors tending to do well or badly. In the US, there has been strong GDP growth of late, much of which has been driven by tax cuts refinancing of mortgages. However, if you look at the US tax cuts that came through last year, the consumer has already spent 97% of what they got. With that in mind, it is good to know another $55bn is coming...