Key points
- German economy contracted by 0.3% in Q2, revising down previous estimates.
- European markets reacted to the weak German data, with mixed results across major indices.
- Investors await Fed Chair Jerome Powell’s Jackson Hole speech for hints on future interest rate decisions.
- EU-US trade deal excludes wine and spirits, leaving room for future negotiations.
European stock markets experienced a mixed performance on Friday, with declines in major indices largely attributed to disappointing economic data from Germany. The German economy, the largest in the eurozone, contracted by 0.3% quarter-on-quarter in the second quarter of 2024, a downward revision from the initially reported 0.1% decline. This contraction follows a 0.3% expansion in the first quarter, highlighting a concerning slowdown in German economic growth.
The annual GDP growth stood at a mere 0.2%, further underscoring a prolonged period of stagnation and leaving Germany’s economic output below its pre-pandemic 2019 levels.
The European stock markets showed mixed performance today. The DAX Performance-Index slipped slightly at 24,266.84, down by 26.50 0.11%, reflecting mild weakness in the German market. Meanwhile, the FTSE 100 Index in London also edged lower, ending at 9,303.08, a decline of 0.066%, signaling cautious investor sentiment. In contrast, France’s CAC 40 managed to post a modest gain at 7,945.82, up 0.095%, indicating relative resilience compared to its European peers.
Despite the negative economic news, market losses were tempered by anticipation surrounding Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole symposium. Investors are keenly awaiting clues about the future direction of US monetary policy, specifically the possibility of a September interest rate cut.
Other central bank leaders, including Christine Lagarde of the European Central Bank and Andrew Bailey of the Bank of England, are also scheduled to speak at the symposium, adding to the overall market focus on monetary policy.
Adding to investor concerns are the details of the recently concluded trade deal between the European Union and the United States. The agreement notably excludes the wine and spirits sector, a point emphasized by EU Trade Commissioner Maros Sefcovic.
While acknowledging the challenges in securing future inclusion of these sectors, Sefcovic indicated that the possibility of lowering tariffs on wine and spirits remains open for future negotiations.
In corporate news, Akzo Nobel saw its stock rise following a 3% stake acquisition by activist investor Cevian Capital. Meanwhile, Air Liquide announced a €2.85 billion acquisition of South Korea’s DIG Airgas. In a setback for Mediobanca, shareholders rejected a proposal to acquire Banca Generali, hindering its efforts to prevent a hostile takeover.
Finally, oil prices edged higher, potentially ending a two-week decline, as ongoing uncertainty surrounding the Russia-Ukraine conflict continues to influence global energy markets.
