European Earnings Need To Buck Up Despite Low Valuations

European stocks opened for business in 2014 to a slew of economic good news.

Manufacturing activity in the Eurozone, as measured by the Markit PMI, climbed to a 31-month high in December. The rise was driven by new export orders as well as manufacturing output. Unemployment in Germany fell for the first time in five months in December, as the number of jobless people fell by 15,000, much more than analysts’ expectations. Spain, too, recently reported a significant dent in its unemployment, the largest fall since June of last year.

European indices powering ahead

Meanwhile, the Stoxx Europe 600 Index has been rising for the last two years and is now perched at the highest levels seen since May 2008....