BT Investment Management head of macro strategies Joe Bracken is becoming more bullish on United States equities as signs emerge of a stronger US economic recovery.

Bracken said the BT Global Macro Fund was currently overweight US equities and he was "cautiously optimistic" on equities generally.

He said he also liked select European equities, despite the region's immense economic problems, and was underweight emerging-market equities and government bonds.

Bracken favoured the Australian dollar against the euro, and expected the local currency to stay above parity against the US dollar this year.

"We have added more risk to our funds in anticipation of an ongoing global economic recovery," Bracken, a leading global asset allocation strategist, said.

"Our expectation is for below-trend global economic growth for some time yet, but we believe equity valuations in the US and parts of Europe look attractive."

US equities were a key overweight position for the BT Global Macro Fund, he said.

"The US economic data has come off the boil a bit in recent weeks, although it is still okay. Unemployment is coming down, retail sales are okay and the housing market, while not recovering, is at least not getting any worse. US equity valuations, in our opinion, offer good value," he said.

Europe was almost a complete opposite of the US economy, he said.

"Unemployment in Europe is going up, retail sales are going down and there are justified concerns about Spanish banks, which have a huge amount of debt tied to Spain's housing market. We don't think the European situation is anywhere near sorting itself out, but a bad Europe won't stop the global economic recovery," he said. 

European equities were sold off too heavily in the past year, he said.

"Oddly enough, sectors within Europe have attractive valuations after falling so far. But you have to be very selective and careful: you don't want to be buying Spanish or Italian bank stocks, but some consumer stocks look okay," he said.

Emerging markets were less compelling as muted economic growth in western economies dented demand for Asian-made goods, he said.

"We don't expect emerging economies to grow at the types of rates we have seen in the past few years. Growth will still be strong, but not as strong, as the US and Europe import fewer goods from China and other emerging markets. That said, we do not expect a hard landing for China's economy, just slower growth than we have been used to," he said.