Europe open: Strong euro and 'seasonality' blamed for putting dampener on stocks
European stocks were mostly in the red on Wednesday as the euro continued its ascent.
By midmorning the Stoxx 600 benchmark dropped 0.25% to 379.3, with Germany's DAX down 0.15%, France's CAC 40 down 0.24% and Italy's MIB losing 0.17%.
This was despite a strong showing on Wall Street, where Apple's surprised with results for its normally soft third quarter, leading many analysts to call Europe higher pre-open.
The EUR/USD moved higher overnight as the greenback softened and by mid morning was up 0.27% on the dollar at 1.1834 and flat against sterling at 0.8941.
Analyst David Madden at CMC Markets saying: "The US dollar has been in decline lately as traders think the Federal Reserve are unlikely to hike interest rates again this year."
Also helping the single currency, the jobless rate in Spain dropped by 26,000 in July.
Producer prices also eased less than expected, according to number from Eurostat. The producer price index moved to 2.5% for June from 3.4% the month before, when it had been forecast to fall to 2.4%.
Chris Beauchamp at IG noted that Europe's falls followed their "heroic efforts" in the previous session, "with the possibility that Tuesday’s gains could be the last hurrah for the bulls, as weaker seasonality takes over for stock markets – August tends to be a tough month for equities, so with the usual ‘first day of the month’ excitement out of the way, today might be a truer reflection of what we can expect for the rest of August, if history is any guide".
Looking to the afternoon, US ADP employment numbers and EIA oil inventories are the main data points.
Oil stockpile figures the prior day showed a rise in supply, coming hours after an OPEC update indicated that the cartel’s output continues to surge.
"The result was to put significant pressure on crude, with a resumption of the steady downtrend in prices looking very likely," Beauchamp added.