LIVE MARKETS-European bulls are coming back

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EUROPEAN BULLS ARE COMING BACK

A few days after tariff panic reached a peak in April, some portfolio managers flagged they were seeing good opportunities in the beaten-down European equity market.

Now that the trade war rhetoric seems to have softened and the STOXX 600 .STOXX has almost recovered all of its post-Liberation Day slump, more European bulls are coming back.

"We now turn back bullish on European equities," Deutsche Bank writes. "We had called for peak fear on April 7, and the start of a de-escalation on tariffs on April 9. Both materialized and the situation continued to improve since."

Strategists at the German bank note the tone on tariffs has softened, sentiment indicators have surprised to the upside, hopes for a ceasefire have re-emerged, and concerns over Fed Chair Powell's position have faded.

Against this backdrop, DB's takeaway for Europe Inc is that earnings revisions could turn more positive again in the coming weeks after the tariff scare caused sharp cuts. Its favourite index is Germany's domestically oriented MDAX .MDAXI.

And DB is not alone.

"The German tiger reawakens," says Carmignac Portfolio Advisor Kevin Thozetin in note last week. He sees the country's new fiscal firepower ushering in a new era.

"The positive narrative from German equities could very well continue or even increase in the coming years. The government's major spending programme for defence and infrastructure – of a magnitude exceeding the Marshall Plan – could put Germany back on track to long-forgotten growth rates," he writes.

(Danilo Masoni)

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