Citigroup's Elise Badoy points out that the European Central Bank's (ECB) interest rate decisions appear to precede those of the US Federal Reserve. Despite some economic weakness in Europe, this could be beneficial for European equities, although overall economic growth remains a predominant factor in assessing the impact on the equity market.

Citigroup expects European equities to rise modestly, with potential gains in the high single digits by the end of the year. The firm has revised its earnings per share (EPS) forecast upwards from 3% to 6% for the year, in line with slight improvements in gross domestic product (GDP) forecasts.

As for industrial performance indicators (PMIs), although they have stopped declining, they have yet to show any clear signs of recovery. 

She insists that European markets are highly international and should not be seen as direct reflections of European economies. She cites the UK as an example of a profoundly international market. Growth for European equities must therefore come from an international arena, with China being a major player in this dynamic. Positive news or signs of easing from China are seen as very important for European equities.

In conclusion, Badoy highlights the resilience of European companies' margins, which has come as a positive surprise to the market, and stresses that earnings growth is expected without necessarily raising market multiples, which remain at around 12 to 13 times EPS.

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