The warnings come as new figures yesterday showed that the eurozone still remains at risk of deflation, however, many analysts believe the ECB will wait some time to assess whether its new ammunition to stimulate prices are working.
The end of the month marked the worst quarters for stocks across Europe and one of the most volatile for currency and corporate debt markets since the financial crisis.
The Iseq index here headed to the end of the quarter with losses of 7% — though it posted gains of 6.75% from this time last year.
After a rally last month, the Ftse 100 in London shed only about 1% since the start of the year, but remains 5% lower from a year ago. And Germany’s Dax index of leading shares slid 7% in the quarter, and dropped 16% from its value of a year ago.
Despite the huge waves of ECB stimulus, the big names in European banks, including Deutsche, Société Générale, and Credit Suisse, all got beaten up in the first three months.
The rout spread, with Bank of Ireland losing about a quarter of its market value since the start of the year.
Banks on the continent face big concerns that negative interest rates are backfiring and eating up what little is left of their profitability.
Swiss equities — traditionally a safe haven — have also been hit. Mostly comprised of firms such as drug maker Novartis and food company Nestle, the Swiss market index is among the world’s biggest losers this quarter.
Dermot O’Leary, chief economist at Goodbody Stockbrokers, said the big issues of what the central banks will do to stimulate the world’s economies will remain in the coming quarter.
He expects the focus, however, to switch away from the ECB to whether the US Federal Reserve will raise interest rates in the coming months.
After some sort of stability in recent weeks, markets face the question whether their jitters about China will return, he said.
And, with polls suggesting a close outcome, the countdown to the UK in-out referendum over Europe on June 23 could yet mean more steep falls for sterling against the euro, analysts say.
Mark O’Byrne, research director at GoldCore Ireland, said he believed that the polls were underestimating the risks of the UK leaving the EU. Sterling barely budged yesterday but has seen its biggest quarterly tumble in six and a half years against the euro.
Jonathan Loynes, chief European economist at Capital Economics, said eurozone inflation will likely stay “well below” the ECB’s target of close to 2%, “maintaining pressure on the central bank for yet more policy support”.
This quarter “has all been about the three Cs: Commodities, China, and central banks,” said Aberdeen Asset Management investment committee member Kevin Daly.
When oil hit $27 a barrel in mid-January there were “pretty dark” predictions for the global economy, he said, but the rebound in crude, China and ECB stimulus, and the Fed cooling rate-hike expectations had all bolstered confidence.