European Markets Dip Amidst Mixed Economic Signals and Political Shifts
European markets dipped slightly despite a strong U.S. jobs report. Germany's economic growth outlook was revised downward, while the Stoxx 600 neared a record high following an ECB interest rate cut. Dutch election results showed a narrow win for left-wing parties and a resurgence of the anti-immigration PVV.
Stoxx 600 Experiences Minor Decline as U.S. Jobs Report Exceeds Expectations
The Stoxx 600 index closed slightly lower, with most major bourses and sectors trading in the red. Utilities stocks were down 1%, while healthcare stocks showed a modest gain of 0.5%. The decline occurred despite the U.S. economy adding more jobs than expected in May, with nonfarm payrolls expanding by 272,000. This figure exceeded the Dow Jones consensus estimate of 190,000 and indicated a robust labor market. U.S. stock markets reacted with mixed results, with the S&P 500 reaching a new record high while the Nasdaq Composite experienced a slight dip.
German Economy Faces Slower Growth Projections Amidst Rising Inflation
In Germany, fresh data from the Bundesbank revealed that the country's economy is expected to grow slightly slower than previously anticipated. The revised projection indicates a growth rate of 0.3%, down from the earlier estimate of 0.4%. Additionally, inflation is expected to experience a slight increase, raising concerns about the economic outlook for Europe's largest economy.
Stoxx 600 Nears Record High Following ECB Interest Rate Cut
Despite the minor decline, the pan-European benchmark index closed Thursday's session near its previous record close on May 15. This performance followed the European Central Bank's decision to cut interest rates for the first time since 2019, a move that was widely anticipated despite persistent concerns about inflation. The key bank rate in the eurozone is now set at 3.75%, down from a record high of 4%.
Dutch Election Results Show Narrow Win for Left-Wing Parties and Resurgence of Anti-Immigration Party
Thursday also marked the start of Europe-wide elections, with exit polls from the Netherlands indicating a narrow victory for left-wing parties. The Labour/Green Left combination secured eight seats, closely followed by Geert Wilders' anti-immigration party (PVV), which is projected to have won seven seats. This represents a significant turnaround for the PVV, which had previously failed to secure any seats in the last EU election despite winning the country's national election the year before.
