In a research note for clients the bank said the risk-reward on buying into European equities is starting to look ‘more favourable’.
European stocks have broadly fallen since highs reached in early April, however much of the QE programme is still to come through into the financial system.
There are also some positive economic indicators in European countries coming through which suggest the market dip of late may represent a buying opportunity.
Within European equities, BAML has picked out banks as its ‘preferred overweight’ and points to healthcare, staples and autos as underweight candidates.
The note said the bank’s ‘central case’ is that Greece will reach a deal with its creditors at some point but there will be a bumpy ride for markets in the near term.
