European Equity Markets Have Reached Macro Singularity


The market is increasingly driven by larger economic forces, challenging active stock pickers.

Frankfurt Stock Exchange As Dollar Drops Amid Big Global Currency Swings

Stock prices are displayed on a financial data board at the Frankfurt Stock Exchange.

Photographer: Martin Leissl/Bloomberg

European equities are all dancing to the same beat.

Stocks across the region over the past two years have increasingly moved to the ebbs and flows of macroeconomic forces — overshadowing company- or industry-specific factors — thanks to risk aversion, low dispersion in company earnings, and a rising degree of correlation between equities and bonds. That’s the conclusion from Goldman Sachs Group Inc., who note that correlations between European equities — an indication of a rising macro-driven market — are at elevated levels relative to history, though they have eased since the record highs notched in the aftermath of the Brexit vote…

European Equity Markets Have Reached Macro Singularity

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