Despite disappointing returns in the last half of 2017 and the first part of 2018, European stocks began to outperform U.S. stocks in April, according to Morgan Stanley. 

In a blog post, Lisa Shalett, Wealth Management Head of Investment and Portfolio Strategies at Morgan Stanley, wrote that she expects to see European markets continue to outperform the U.S. for three reasons.

One is that European markets are at an early stage of economic expansion and still have an opportunity for improved business activity while the U.S. is showing signs of late cycle dynamics, including peak profit margins and low unemployment, Shalett wrote.

Another reason for the European market's rise, she said, is because the European Central Bank is unlikely to take aggressive actions, unlike the U.S. Federal Reserve. For one, the former will not raise interest rates until 2019 while the U.S. has already raised interest rates six times since 2015.

Finally, Shalett pointed out that European stocks are cheaper than U.S. stocks. Generally, the MSCI Europe index sells only at 14.1 times its multiple, compared to the S&P 500 index, which sells at 16 times its multiple. 

Shalett also noted that investors are taking note of Europe’s relative political stability compared to the U.S. right now.