The dollar stabilised on Tuesday but still remained close to the record lows against the euro achieved on Monday. If the greenback is heading steadily downwards, that has significant consequences for the European equity markets.

Traditionally, periods of dollar weakness have coincided with phases when European stock markets have underperformed Wall Street in local currency terms. That has been the case since the Presidential election result, with the US market moving sharply ahead on the last three trading days of last week. Over the year as a whole, however, European shares have marginally outperformed in local currency terms.