European stocks fall on euro strength
European stocks ended the day down sharply, with the Euro Stoxx 50 losing 0.56% and Germany’s DAX Index down 0.3%. The strengthening euro is to blame, as the chart shows: European stocks don’t like a strong euro, which dampens European exports. Still, it’s surprising to see European stocks clobbered on a day that the Dow-Jones average adds 350 points (as of 12:50 p.m.).
European inflation came in slightly below expectations in this morning’s report (Eurozone core CPI rose just 0.9% year-on-year). Germany’s unemployment rate, meanwhile, fell to a record low of 5.6%. Under normal circumstances that should have weakened the euro. Instead, the European unit rose against the dollar, despite a 3 bps rise in the US 10-year yield and a 1 bps fall in the German 10-year yield.