- Home
- >
- Stocks Daily Forecasts
- >
- The strong euro makes investors avoid European stocks
The strong euro makes investors avoid European stocks
Rating:
Loading...European stock funds suffered their largest redemptions in nearly six months as the region’s strengthening currency damped investor enthusiasm.
Investors pulled $1.4bn from European equity funds in the week ending August 30, according to data provider EPFR.
The withdrawals come as the euro has continued to strengthen against the dollar and British pound. The euro has climbed 13.3 per cent this year, reaching a two-year high of $1.21 against the dollar in August.
Consistently strong economic data showing solid growth in the region has helped bolster the currency, alongside expectations that the European Central Bank is likely to begin tapering its quantitative easing programme before the end of the year.
European equity funds have recorded inflows of more than $30bn this year, but the stronger currency is beginning to shift investor sentiment, said Vincent Deluard, global macro strategist at INTL FCStone.
In the US, stock markets remain below record intraday highs reached earlier this summer. Geopolitical concerns, high stock price valuations, doubts about the ability of inflation to rise and an intensifying debt ceiling debate have given some investors reason to suspect a turning point for equities.
Some investors say that with strong US GDP numbers, continued low volatility and a weaker dollar expected to bolster earnings, it is still too soon to call the top for US stocks, however.
Elsewhere, global high-yield bond funds posted inflows of $272m. Strategists at Goldman Sachs said that despite the stronger euro and concerns about the central bank’s action over quantitative easing, they still prefer European credit over the US.
Source: Financial Times
Jr Trader Ivan Ivanov
Varchev Traders Read more:
If you think, we can improve that section,
please comment. Your oppinion is imortant for us.
