European shares are trading in the red in the early afternoon Monday, as a stronger euro is making stocks more expensive for overseas investors. Falls are limited by the possibility that a political stalemate in Italy could be over, while US-China talks appear to take an upbeat turn.
By 1325 BST, the EUROSTOXX 600 was down 0.29%, while the EUROSTOXX 50 was off 0.23%. The German DAX was 0.41% in the red, the French CAC was 0.25% lower and the Spanish IBEX was 0.22% in negative territory.
The US dollar has lost ground against the euro and the British pound, earlier Monday, making European and British stocks more expensive for investors making their purchases in the dollar currency.
The euro has gained ground against the dollar after European Central Bank member Francois Villeroy de Galhau said that despite some recent softer economic data, the end of the ECB’s net asset purchase programme is moving closer. He added the exact timing – whether it be September or December – “is not a deep existential question.”
As the end of the ECB’s asset purchase programme approaches, so the timing of the first ECB rate hike for many years, will begin to draw nearer. And, with higher interest rates comes a higher local currency.
News that the Italian political deadlock is close to being broken helped limit the losses imposed by a stronger euro. Reports suggest that two parties, 5-Star Movement and League party have reached an agreement to run the country together.
Against that backdrop there have been some notable stock moves.
Airbus shares are 2.30% lower at €97.16 as a major Iran plane order could be over and as it announced its CFO, who has worked for the plane maker for 27 years, will stand down in 2019.
Energias de Portugal, or EDP shares are 9.39% higher at €3.40 in the wake of a bid from China Three Gorge (CTG) to buy the remaining shares it doesn’t already own.
However, the EDP share price has already risen to above the offer price put forward by CTG, raising questions over whether shareholders will part with their stock at the price.