Blackrock’s Chief Investment Strategist, Martin Lueck, notes that this should be (in theory) one of the better environments for European equities, as the market is in “risk-on” mode. When the market has an appetite for risk, investors are more willing to invest overseas, whereas when the market is more adverse to risk, investors prefer U.S. assets.

However, U.S. equities have far outpaced their European counterparts so far this year, and Blackrock remains overweight U.S. stocks relative to Europe (due to higher earnings growth in the U.S. and continued political risks in Europe). Lueck believes a positive resolution of these political risks (Brexit, Italy’s upcoming budget release) could be the first step to pushing European equities higher. Until then, Blackrock remains cautious on Europe overall.