European stock investors are starting to put their money where the euro is. After years of currency weakness that boosted exporters amid unprecedented monetary stimulus, stocks reliant on the domestic economy are beginning to outperform. Strategists from firms including JPMorgan Chase & Co., BNP Paribas SA and Kepler Cheuvreux SA say the trend will pick up pace as the region’s growth improves and the euro strengthens against the dollar. Boosted by the single currency’s stellar gains this year, JPMorgan’s basket of local stocks—which includes Zara owner Inditex SA, French construction company Vinci SA and Dutch brewer Heineken NV—has climbed more than one of exporters. Stock benchmarks in Italy and Spain, whose members rely more on the domestic economy, are also beating Germany’s exporter-heavy DAX Index in May. “We are starting to see a trend, especially in the past month, where more domestic companies, like retailers, have been outperforming, while exporters in the auto and aerospace and defense industries are lagging,” said Pierre Martin, a trader at Saxo Bank in London. “For investors who are targeting around 1.15 for the euro against the dollar, it would make sense to be a bit less bullish on companies like Airbus and Michelin.” Carmakers, among the biggest winners since European Central Bank President Mario Draghi’s 2012 pledge to preserve the euro through the end of last year, are the worst losers in industry groups this month. Airbus SE, which gets about two-thirds of its revenue outside the region, has dropped 1.8 percent, while Heineken has surged 6.8 percent and retailers Inditex and Hennes & Mauritz AB are up 2 percent or more. May has marked the longest stretch in almost a year in which the Euro Stoxx 50 Index and the single currency have moved in sync. A sustained positive correlation could signal the reversal of a trend that has been in place since 2014 as the weakening exchange rate boosted overseas profit at global giants in the benchmark gauge. For money managers assessing whether the euro will rise beyond levels that multinational firms typically hedge for, the ECB’s June meeting will be key. “The trend has caught our eye— if the euro strength persists, we will consider adding a bit more to small caps, which tend to be more domestic,” said Simon Wiersma, an Amsterdam-based investment manager at ING Bank NV, which oversees about 26 billion euros ($29 billion). If the economic data “stay as good as they are now, the euro could get stronger.” The currency has risen the most among the Group of 10 countries in 2017, reaching a six-month high of 1.1268 versus the dollar earlier this week. The critical level for equity investors would be around 1.15, said Wiersma, particularly if the euro stays above that threshold for three months or longer. Major global firms are likely to be hedged for a rise up to that level, according to Saxo Bank’s Martin. Investors will closely watch the ECB meeting on June 8 for clues on the longevity of the trend, as a steady stream of positive economic data heightens pressure on officials to outline an exit strategy from years of accommodative monetary policies. Such speculation has been one of the factors driving the euro higher, according to Lukas Daalder, the Rotterdam-based chief investment officer for investment solutions at Robeco. “From where we are now, further strength in the currency is going to start creating a problem for some companies’ profits, and benefit domestics,” said Emmanuel Cau, a London-based equity strategist at JPMorgan. “We are starting to see some rotation already. A stronger euro is ultimately a good thing for European equities.”