The pan-European STOXX Europe 600 Index, the UK’s FTSE 100 Index, and the exporter-heavy German DAX Index all rose slightly throughout the week amid hopes that the Group of 20 summit would ease trade tensions.
The yield on the 10-year German bond fell to -0.34% as European economic indicators continued to disappoint. The European Commission’s economic sentiment indicator dropped to its lowest point in nearly three years in June as confidence fell dramatically in Germany and Italy.
The deterioration was driven by a drop in confidence in the export-driven industrial sector, which has come under pressure from global trade tensions.
Confidence in the services sector also declined, as did consumer confidence. The widely watched Ifo Institute also reported that the mood among German business leaders fell for the third consecutive month and hit its lowest level in five years, while the forward-looking GfK consumer confidence survey for July came in below expectations.
Italy’s budget standoff with the European Union came down to the wire when Italy’s anti-establishment coalition decided to delay setting a lower deficit target for 2020.
The European Union’s College of Commissioners has until next week to decide what to do with Italy and is required to report to the eurozone finance ministers in early July.
Italian Prime Minister Giuseppe Conte said Rome is holding a constructive dialogue with the European Commission to avoid a disciplinary procedure.
Source - Galt & Taggart
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