Euro jumps to highest since last May
Stocks across Europe fell Tuesday, under pressure as the euro stepped up to a 14-month high against the U.S. dollar and as disappointing corporate earnings reports rolled in.
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The Stoxx Europe 600 lost 0.6% to 7,359.79, with only the health care sector moving higher.
The moves came after Republican leaders in the U.S. Senate late Monday ditched their bill to repeal and simultaneously replace (http://www.marketwatch.com/story/health-care-overhaul-seems-sunk-as-two-more-republicans-oppose-senate-bill-2017-07-17) much of the Affordable Care Act, or "Obamacare," because the health care bill didn't have enough votes to pass.
That seemed to rattle investors' faith that President Donald Trump would be able to push through his pro-growth agenda, and the ICE Dollar Index was pushed back to levels not seen since September 2016.
"Without a successful repeal of the Obamacare legislation, [U.S. President Donald] Trump will have trouble financing his own plans making it very difficult to see how the dollar can remain bullish," said ADS Securities researcher Konstantinos Anthis in a note.
That helped drive the euro above $1.15 against the U.S. dollar for the first time since May 2016. A stronger euro can hurt European exporters as it makes their products more expensive for overseas customers to purchase.
European equities were among those that had rallied after Trump's election in November on the prospect that plans for higher fiscal spending and lower corporate taxes would benefit European companies.
Earnings season: Ericsson shares (ERIC) tumbled 10% after the Swedish telecom-equipment maker swung to a bigger-than-expected net loss (http://www.marketwatch.com/story/ericsson-swings-to-loss-vows-to-step-up-cost-cuts-2017-07-18) of 1.01 billion Swedish kronor ($122.3 million) in the second quarter. The company warned that earnings could weaken further as the market continues to struggle.
Zalando SE (ZAL.XE) shares fell 6.5% after the German online retailer's sales growth slowed in the second quarter, according to a preliminary earnings report.
But shares in Novartis AG (NOVN.EB) moved up 2.3% after the Swiss drug maker reported a slight gain in second quarter net income (http://www.marketwatch.com/story/novartis-income-falls-but-beats-expectations-2017-07-18).
Individual indexes: In Frankfurt, the exporter-heavy DAX 30 index dropped 0.5% to 12,519.47, while France's CAC 40 index gave up 0.4% to 5,207.34.
Spain's IBEX 35 moved down 0.2% to 10,630, and Italy's FTSE MIB shed 0.1% at 21,462.
ECB and euro: "With the euro having broken above multi-months highs it will be key to see whether the single currency holds on to its gains ahead of the European Central Bank meeting on Thursday," Anthis said.
ECB President Mario Draghi is expected to be pleased with the progress of the euro area and attempt to prepare the markets for reduced stimulus from the ECB in the months to come, so we expect the euro to trade with a positive bias going into the central bank's meeting, he added.
(END) Dow Jones Newswires
July 18, 2017 05:14 ET (09:14 GMT)