Citigroup: Euro Strength May Cast Shadow on European Stock Markets

In a research report, Citigroup strategists pointed out that as investors seek to diversify their US asset allocation, the strengthening of the Euro against the US dollar has once again become a focus, which may cast a shadow over European stock markets. The strategist stated that the continued appreciation of the Euro will reinforce a neutral view on European stocks, as recent transatlantic tensions and trade uncertainty have weakened short-term investment prospects and raised doubts about overall profit recovery this year. According to Citigroup's calculations, a 10% appreciation of the Euro against the US dollar could reduce earnings per share for European companies by about 2%. Citigroup also added that commodities, food and beverage, healthcare, luxury goods, and automotive industries seem to be the most vulnerable to the impact.