European Stocks Push on to Record in May
Dr. Jan-Carl Plagge, Head of Applied Research
Decline in dollar weighs on global equity returns for Europe-based investors.
A drop in the US dollar weighed on global equity returns for Europe-based investors in May, while European shares extended a yearlong rally to an all-time high.
The STOXX® Global 1800 Index retreated 1% in euros1 for the month but rose 2.2% in dollar terms. The EURO STOXX® 50 Index of companies in the Eurozone advanced 1%, reaching the highest since data starts in 1986. The pan-European STOXX® Europe 600 Index added 1.5%, also touching a record high.
The STOXX® USA 900 Index, measured in dollars, rose 1.2%.
Global equities have built up on a multi-year rally, with investors unfazed by rising valuations amid signs the economy is gathering momentum. Accusations that US President Donald Trump has interfered with an investigation into Russia’s possible collusion with the Republican Party’s presidential campaign, and concern that the UK will fail to secure a trade agreement as it leaves the European Union, have failed to dent the rally.
European equities have been further underpinned by ballot defeats of populist parties this year in the Netherlands and France. Separately, surveys showed the manufacturing and services industries in the Eurozone continued their expansion in May.
The common currency jumped 3.2% against the dollar last month. Economists cited increasing political confrontation in Washington DC as a reason for the greenback’s decline.
Utilities, travel and household goods lead advance
The STOXX® Global 1800 Utilities Index led gains in May among 19 industries after rising 2.8%. The STOXX® Global 1800 Travel & Leisure Index and the STOXX® Global 1800 Personal & Household Goods Index followed, with respective gains of 2.5% and 2.1%.
The three-worst performing industries during the month were the STOXX® Global 1800 Oil & Gas Index, the STOXX® Global 1800 Basic Resources Index and the STOXX® Global 1800 Banks Index. All three retreated more than 4%.
Greek debt relief talks continue
The STOXX® Greece Total Market Index jumped 10.9% in May, the top performer among 64 STOXX country indices.
Investors have backed a potential agreement between the Greek government and its creditors that would lead to debt relief for the southern European country. Talks between parties have extended for months.
The STOXX® Portugal Total Market Index produced the second-best performance in May, with a 6.3% advance, while the STOXX® Austria Total Market Index was the third-best performer after climbing 4.4%.
On the other end, the STOXX® Australia Total Market Index underperformed all other 63 national indices with a 6.3% retreat. The Thomson Reuters CRB Commodity Total Return Index extended losses in May, taking the retreat in 2017 to 5.5%.
EURO STOXX® 50 Index
STOXX® Global 1800 Index
STOXX® Europe 600 Index
1 Performance figures are net of dividends.