Two long-awaited equity market trends are likely to see differing fortunes in 2017. A widely foreseen "great rotation" out of bonds has been in full swing since US president-elect Donald Trump unveiled a raft of reflationary policies, but analysts remain sceptical that momentum will be maintained. Instead - and after many false dawns for the outperformance trade - it may be European equities that emerge as the winners in 2017. Despite a flood of flows into US equities in the wake of the election, Europe could be on course to deliver the first earnings growth in five years as accommodative monetary policy supports a modest economic recovery and closes the transatlantic valuation gap.
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