European Stocks: A Troubling Outlook
European stocks are facing their worst run since 2018, with weak economic data and a strong euro weighing on the markets. The Stoxx Europe 600 Index has dropped for five consecutive weeks, the longest losing streak since the summer of 2018. The index is down 4.3% since the start of September, and is on track for its worst month since March.
Economic Data Weighs on Markets
The European markets have been hit hard by weak economic data. Manufacturing activity in the euro area fell to its lowest level in over two years in August, according to a survey by IHS Markit. The survey showed that the manufacturing sector contracted for the fourth consecutive month, with output and new orders both declining.
The services sector also contracted in August, with the IHS Markit survey showing that activity fell to its lowest level since April. The survey showed that new business and employment both declined, while business confidence fell to its lowest level since 2013.
Strong Euro Hurts Exports
The strong euro has also been a drag on the markets. The euro has gained more than 5% against the U.S. dollar since the start of the year, making European exports more expensive. This has weighed on the markets, as many European companies rely heavily on exports.
The strong euro has also made it more expensive for European companies to borrow money. This has put pressure on companies’ profits, as they have to pay more to borrow money.
Central Bank Stimulus Fails to Boost Markets
The European Central Bank has taken steps to stimulate the economy, but these measures have failed to boost the markets. The ECB has cut interest rates to record lows and launched a massive bond-buying program, but these measures have failed to lift the markets.
The ECB has also launched a new program to provide cheap loans to banks, but this has failed to boost the markets. The ECB’s measures have been largely seen as too little, too late, and have failed to convince investors that the economy is on the right track.
Political Uncertainty Adds to Market Woes
Political uncertainty has also weighed on the markets. The U.K. is set to leave the European Union at the end of the year, and there is still no clear agreement on the terms of the exit. This has created uncertainty for businesses, and has weighed on the markets.
The French presidential election is also looming, and the outcome could have a major impact on the markets. The election is expected to be a close race between the incumbent president and his far-right challenger, and the outcome could have a major impact on the markets.
Outlook for European Stocks
The outlook for European stocks remains uncertain. The weak economic data and strong euro are likely to continue to weigh on the markets, while the political uncertainty is likely to remain a factor.
The ECB’s measures have failed to boost the markets, and it is unclear if the central bank will take further action. The outcome of the French presidential election could also have a major impact on the markets.
Overall, the outlook for European stocks remains uncertain. The markets are likely to remain volatile in the near term, as investors weigh the risks and opportunities.