Mark Haefele: euro zone equities still offer the best opportunity

The weakened euro and cheap oil will drive strong earnings growth, which he expects to hit around 12-15 percent this year, and ultra-easy monetary policy is boosting the outlook for economic growth, Haefele said in an investment update to clients.

"Over our six-month investment horizon, euro zone equities still offer the best opportunity," he said.

"Elsewhere, we see promising relative value opportunities. We are introducing an overweight Japan equity position versus U.K. equities. Not only do leading indicators point to an improving outlook for Japan, but we have now seen strong profit growth for long enough to be confident in such qualitative measures," he added.
Tread carefully in tech

The tech giants' mounting cash piles are attractive to income-hungry investors, as shareholders are increasingly calling for the huge funds to be returned to them in dividends, according to global equity fund manager at Kames Capital, Craig Bonthron.

Cisco and Intel, have become important stocks for income investors and the sector recently overtook the financial sector to become the largest contributor of dividends to the S&P 500, accounting for 15 percent of total dividend pay-outs according to Kames data.

But while this shift has increased options for income-seekers, Bonthron warned investors need to treat the sector with caution.

"All else being equal from a dividend yield or capital return perspective, it will always be riskier for an income investor to choose a technology stock over a staple food producer, for example, which offers predictable cash flows and a proven record of paying dividends to shareholders," he said.

"We constantly question whether cash flows at technology companies are sustainable and if their market shares' are vulnerable to disruption," Bonthron added.

In the U.S., markets have been counting on companies such as Google, Netflix, Amazon, Facebook, Visa, Starbucks to drive the markets higher, head of technical analysis at Cornerstone Macro, Carter Worth said.

These big growth names are now "fully exploited" and so can no longer be relied upon to lead U.S. equities higher.

 Varchev Traders