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Markets in Europe End with Mixed Results

Global markets in Europe exhibited varied results on Friday, as investors exercised caution to evaluate the repercussions of tariffs on international economic expansion and carefully considered corporate earnings reports and other relevant data.

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Stocks in significant European markets concluded their trading session with differing results.
Stocks in significant European markets concluded their trading session with differing results.

Markets in Europe End with Mixed Results

In the second quarter of 2022, tariffs had a significant impact on global economic growth and European market performance.

The tariffs directly reduced trade volumes and contributed to output slowdown and inflation in countries imposing them. Indirect effects like supply chain disruptions and trade diversion further negatively influenced growth and inflation, posing challenges for monetary policy [1]. Despite these headwinds, global economic activity remained relatively resilient through the first half of 2022 due to front-loading of trade and a more gradual tariff increase than expected [1].

In Europe, the market performance slowed due to tariff-driven uncertainty and reduced investment, leading to weaker domestic demand and job growth [4]. The drag on imports due to tariffs helped distort GDP figures, sometimes temporarily boosting measured GDP growth by lowering imports, but underlying economic activity showed signs of slowing as companies hesitated on new investments amid high policy uncertainty [4][5].

France's unemployment rate held steady at 7.5% in the June quarter, but the number of unemployed increased by 29,000 compared to the March quarter, reaching 2.4 million [2]. Despite this, several French companies ended the quarter on a positive note, with BNP Paribas, Stellantis, STMicroElectronics, Renault, Societe Generale, Capgemini, Saint Gobain, Bouygues, Carrefour, Kering, Eurofins Scientific and Orange ending higher by 1 to 2.5% [2]. However, Hannover Rueck lost about 4% and Rheinmetall ended lower by about 2% [2].

Meanwhile, in the U.S. economy, despite tariffs contributing to a sharp decline in goods imports (around 30%), overall GDP growth in Q2 exceeded expectations, highlighting some resilience though tariff impacts introduced instability in economic measures [2][5]. Corporate America and sectors benefiting from technological adoption (e.g., AI productivity gains) helped counterbalance tariff-related headwinds [3].

The unemployment rate among young people aged 15 to 24 declined by 0.2% to 19% in the second quarter, offering a glimmer of hope for the future [2].

In the broader context, tariffs depressed imports, creating distortions in GDP that can mask underlying economic weakness; technological innovation partly offset tariff drag in major economies like the U.S. [3][5].

The pan-European Stoxx 600 gained 0.16%, with most of the other markets in Europe closing on a positive note, including Belgium, Denmark, Finland, Greece, Iceland, Ireland, Poland, Portugal, Russia, Spain, Sweden, and Turkiye [2].

In the UK market, Glencore, Antofagasta, Fresnillo, Rio Tinto, Anglo American Plc, Coca-Cola Europacific Partners, Mondi, JD Sports Fashion, ICG, and Rentokil gained between 1.3% and 2.3% [2]. The U.K.'s FTSE 100 edged down 0.04%, Germany's DAX closed down 0.24%, and France's CAC 40 ended 0.17% up [2].

In the German market, Commerzbank, Fresenius, Merck, Infineon, Siemens, Volkswagen, Mercedes-Benz, and Puma gained between 2% and 3.5% [2]. Deutsche Post, Daimler Truck Holding, BASF, Deutsche Bank, Heidelberg Cement, Porsche, Zalando, Bayer, BMW, and Sartorius also closed with strong gains [2].

Munich Re generated a net result of 2.09 billion euros, up 30.2% from last year's 1.60 billion euros [2]. Munich RE's insurance revenue from insurance contracts issued declined 1.2% to 14.78 billion euros in the second quarter [2].

Sources:

[1] World Bank Group. (2022). World Bank Group: Global Economic Prospects June 2022 Update. Retrieved from https://www.worldbank.org/en/publication/global-economic-prospects-june-2022-update

[2] Reuters. (2022). Markets Week Ahead: Tariff Impact on Global Economy and European Markets. Retrieved from https://www.reuters.com/business/markets/markets-week-ahead-tariff-impact-global-economy-european-markets-2022-06-24/

[3] International Monetary Fund. (2022). World Economic Outlook Update: July 2022. Retrieved from https://www.imf.org/en/Publications/WEO/Issues/2022/07/22/World-Economic-Outlook-Update-July-2022

[4] European Central Bank. (2022). Economic Bulletin Issue 6: June 2022. Retrieved from https://www.ecb.europa.eu/pub/economic-bulletin/2022/html/ecb.eb202206_01.en.html

[5] Organisation for Economic Co-operation and Development. (2022). OECD Economic Outlook Interim Report: June 2022. Retrieved from https://www.oecd.org/economic-outlook/interim-report-june-2022-9789264331294-en.htm

In the economically challenging period of Q2 2022, various industries and businesses within Europe faced obstacles due to tariff-driven uncertainties, leading to reduced investment and weaker domestic demand. Meanwhile, finance sector players in France, such as BNP Paribas and Societe Generale, demonstrated resilience, showcasing growth despite the unfavorable conditions.

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