Eurozone business activity expanded in July for the first time in four months, according to flash Purchasing Managers' Index data. The PMI reached multi-month highs, signaling that economic momentum in the currency bloc is picking up after a prolonged contraction. The reading marks a meaningful inflection point in a region that has been grinding through stagnation.
A return to expansion in Europe reduces the probability of a near-term recession in the eurozone, which supports European equities and the euro against the dollar. Investors holding European-focused ETFs or multinational stocks with heavy eurozone revenue exposure stand to benefit if the momentum holds. It also gives the European Central Bank more room to hold rates steady rather than cutting aggressively, which affects bond prices across the region.
July 30: European Central Bank rate decision. August 14: Eurozone Q2 GDP preliminary estimate. August 22: Next flash eurozone PMI release.
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