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Market Wrap-up for May 13 - Eurozone Flashes Signs of Life

Jared Cummans May 13, 2015


The U.S. economy has been enjoying strong progress in recent years along with a frothy bull market. But overseas it’s been quite a different story; the eurozone in particular has struggled to gain the same traction as the U.S., with several of its individual economies suffering from stagnant growth. Data from this morning, however, showed a welcome sign of life for the currency bloc.


Eurozone GDP Encouraging


This morning, GDP for the eurozone came in at 0.4%. While this was 0.1% lower than forecasts, it was still 0.1% above the final quarter of 2014. For the first time in five years, all four of the eurozone’s largest economies reported growth (though German figures disappointed markets) and it was also the first time in four years the eurozone outgrew both the U.S. and the U.K.

The news brings a sigh of relief for European policy makers, as the ECB has been aggressively working to stimulate the economy in similar ways as the Fed in the U.S. The eurozone now has a handful of factors playing in its favor: the new ECB stimulus, cheap oil prices, and a weak euro. Growing as a group of 19 nations is certainly no small task, and the eurozone has not been without its bruises these past few years.


European Struggles


Greece has been the most notable country to struggle. It was reported today that its economy has fallen back into a recession. The country has been struggling with a massive debt pile and has contemplated leaving the currency bloc in an effort to deal with its economy more internally. Riots and general public disapproval have been peppered in throughout this process.

Germany is another economy that has been under investors’ microscopes. The nation has often been the leader of economic growth for the eurozone, but showed growth of just 0.3% this past quarter, a marked decrease from 0.7% the quarter before. This forced economists to lower the full-year GDP outlook for the European nation. While economies like Spain and France helped make up for a slowing Germany, if the latter continues to sputter it will add contined pressure on the eurozone.


The Bottom Line


As one would expect from data that relies on 19 individual nations, there are always positives and negatives to any report concerning the eurozone. This most recent GDP report has certainly been more positive than negative, but investors will still want to keep an eye on the region as 2015 presses on to see if it can maintain this strength.

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