The correlation between European and US stocks reached the pre-crisis levels in 2007-2008. The 120-day average of the correlation between the Stoxx Europe 600 and the S&P 500 dropped from 0.6 in early February to 0.37, standing far from the unit that represents the perfect correlation.
What is the reason for this?
Everything comes down to two factors - the Commerce War and the collapse of US technology giants, in the face of Facebook and Amazon. Technological stocks account for 5% of the Stoxx 600, while the SP500 weight is 25%. On the other hand, China and the United States are already waging war against each other, with Europe successfully negotiating with the United States. Europe remains far from import tariffs on aluminum and steel, but Trump's sole and unexpected solutions do not guarantee security in the region.
Source: Bloomberg Pro Terminal
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