The bearish forecasts for European equities are starting to fulfill

Finally, the bears can exclaim "I told you!"

For months, the strategists predicted a pause in the rally in European stocks, and that moment came in May. Shaken by the clashes between the US and China, the Stoxx Europe 600 is about to record its first monthly retreat in 2019, breaking its winning series, which lasted almost two years. It could be worse if bad forecasts continue to run.

According to a Bloomberg survey, these answers indicate a 5.4% drop in the index by the end of 2019. The poll indicates that the expectations for the Euro Stoxx 50 are to fall by 4.7% over the same period.

Analysts remain pessimistic. Commercial wars only add to the strain of Europe, which is beset by a political crisis in Italy and by Brexit and weak economic data. Taking short positions against European stocks is currently the most common move of investors, according to a study by Bank of America.

And just a few weeks ago things looked good. At the end of April, the Euro Stoxx 50 needed just another 1% growth from officially entering the bullish market, at the same time Societe Generale recommended investments in shares of small-caps companies and car makers. However, these scenarios did not develop very well, especially for the automotive industry, which suffered the greatest damage due to the trade war with the United States.

For a short period of time in the reporting season there were reports with better results than expected in April. For the month of May however, profits again went down, overshadowing the positive projections from earlier.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

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