European stocks lag US by record margin as ‘Trump trade’ bites

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Euro has tumbled as investors worry currency bloc will be on front line of trade war

European markets are lagging behind Wall Street by a record margin after Donald Trump’s election victory pushed the region’s stocks lower and sent the euro tumbling. US stocks hit record highs after Trump secured his second term in office and are up nearly 25 per cent so far this year. But European equities have turned downwards as traders try to price in the impact of Trump’s promised tariffs on exporters.

At the same time, several of Trump’s proposed policies, including tax cuts and deregulation, have boosted the outlook for US companies. The dislocation has prompted fund managers to vote with their feet: the latest Bank of America survey showed the proportion of fund managers that had gone overweight US stocks had reached an 11-year high after the election, while the balance remained underweight Europe.

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