Euro-zone equities have surged since the end of December, with the DAX up nearly 10%. The key driver of returns has been the anticipation and subsequent launch of the ECB’s quantitative easing programme, as well as the adverse effect that this has had on the value of the euro. Admittedly, prior declines in the currency have tended to be accompanied by falls in euro-zone stock markets, reflecting concerns about the future of the region. This time around, though, a weaker euro is rightly being seen as a channel through which deflation can be avoided and earnings bolstered.
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