Stocks are rising to fresh highs after six straight months of gains as strong earnings help reassure investors who are keeping a close eye on inflationary pressures and rising cases of the delta virus variant. Strategists expect more market volatility in the coming months, just as equities head into a period that tends to be historically the weakest.

“Earnings have been very positive in general,” said Alfonso Benito, chief investment officer at Spanish asset manager Dunas Capital. “We now enter a very quiet period, with low volumes and central banks on holidays, so any news could have a big impact as we have seen in previous Augusts, when volatility has picked up.”

Recovering Earnings Keep Macro Worries at Bay: Taking Stock

Among other movers, Allianz SE declined as it warned earnings could be materially hurt by a U.S. probe.

Europe is seeing the best earnings revisions of all global regions, according to Morgan Stanley strategists, although second-quarter results so far have delivered a narrower breadth of EPS beats than the first quarter.

Overall, a more dovish tone from the European central bank than from the U.S. Federal Reserve, combined with more attractive valuation levels in Europe, could lead to further investment flows into the region from U.S. and international asset managers, said Gérard Piasko, chief investment officer at Maerki Baumann.

“On the one hand, stock markets are supported by the good economic situation, on the other hand, valuations are now historically above average,” Piasko said. “The latter is more true of U.S. than European stocks, however. We remain overweight European stocks versus U.S.”

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