THE euro area debt crisis is delivering more surprise results than the Premier League. Even veteran pundits were lost for words last week when Greece responded to its partners’ offer to forgive half its debt burden by saying, effectively, that it would have to think about it.

Now, not only is Greece in the process of restructuring its government, Italy also looks poised for a leadership change.

In the face of ever-changing politics, equity investors could be forgiven for feeling a little disorientated.

Now seems a good opportunity to provide some orientation of where we are this year in terms of performance earnings achieved and expected for 2012, in both Europe and the US.

So far this year, the S&P 500 is actually up in terms of total return with the US overall providing the highest returns among developed equity markets. Top performing sectors include utilities, healthcare and consumer staples.

In Europe, equity markets are still down from the start of the year. The MSCI Europe ex UK has lost 12%, having suffered more than the US in the third quarter and recovered less so far in this quarter.

The financial sector has underperformed over the year with investors no doubt waiting for more details on the eurozone rescue package before betting on banks.

In terms of company earnings, around half of the Euro Stoxx 600 have so far reported earnings in Europe and few of these are beating expectations. Analysts now expect less than 11% growth for 2012 earnings from the Stoxx 600, down over 300 basis points since the start of the quarter.

These aren’t great statistics for the euro area. But on the other hand authorities are focusing more directly on the banking system, which has itself taken some action already to write-down or reduce its peripheral exposure.

The European Central Bank’s rate cut last week also helps a little – the “mild recession” projected by EU President Signor Draghi notwithstanding – though its ongoing liquidity provision is most important.

On the basis of this, we argue that both the major concerns dogging the markets since the summer should become a little less pressing. Some progress has been made on the euro area crisis and the US ‘double dip’ debate.

The US has been a little overlooked amid the euro area excitement, but the latest forward-looking surveys again point to continuing growth. Even last week’s lagging labour market data look a little less fragile. Remember also, ongoing US growth trumps a mild euro area recession.

We continue to recommend investors sit tight and hold on to positions in risk assets – particularly developed equities and high yield credits. Cash is our preferred ‘safe haven’ and bonds our least favourite asset.

:: Andrew Miller is regional office director of Barclays Wealth