Re-Emerging Markets: The European Giant Awakens

Inflation looks under controlThe inflation rate peaked at over 10% in some countries in 2022. Now, things look much better. Energy prices, a major driver of inflation, are dropping due to more stable global markets and increased investment in renewable energy. Price pressure on food and other consumer goods is also declining. The decline in inflation not only improved consumer purchasing power but also gave the European Central Bank (ECB) new scope for easing monetary policy.  In this cycle of interest rate cuts, the ECB has already lowered the key interest rate eight times, from 4 to 2 percent, thereby improving investment conditions for companies.  Massive investments in diversifying the energy supply are paying offThe fact that Europe's energy dependency has been put into perspective also contributes to the new optimism. Massive investments in diversifying the energy supply are having a significant impact. Liquid gas imports, the expansion of storage capacities and a significant acceleration in the expansion of wind and solar energy are ensuring a broader and less crisis-prone supply situation. Companies, particularly those in the energy-intensive manufacturing sector, can plan more effectively and reliably maintain their production. This strengthens the industry and creates confidence.  Unemployment rates are at historic lowsUnemployment has stayed low despite the economic downturn, and the fact that real wages are now rising more strongly again is having a positive impact on households. Unemployment rates are at historic lows in many countries. In Germany, the Netherlands, the Czech Republic and Poland, there is even a shortage of skilled workers. A stable labor market not only contributes to social peace but also supports private consumption, one of the key drivers of economic growth in Europe. Consumers are once again more willing to spend, which particularly benefits the retail, restaurant and tourism sectors.  Potential for a further improvement in economic sentiment in global tradeThere is still room for improvement in global trade sentiment, which has only shown minor signs of recovery so far. A revival in global trade, including stabilized demand from China and a resolution to the tariff standoff with the USA, would especially benefit export-focused economies like Germany, France, and Italy. Additionally, new trade agreements, such as those with countries in Southeast Asia or Latin America, would open up new markets for European products.  Europe’s preparing to play a more meaningful role in global financial marketsOne important element of thinking more constructively about Europe is the continent’s orientation towards a Capital Market Union. In this, the EMIR 3.0 Active Account Requirement (AAR), effective as of 24 June, marks a significant milestone in the development of European clearing markets, introducing enhanced systemic safeguards alongside a framework for increased transparency and innovation. Beyond its regulatory impetus, the ARR has the potential to unlock margin, capital and collateral efficiencies. This could further help attract capital to Europe and strengthen the euro’s role as a global currency, especially against the backdrop of increasing dollar skepticism.  In summary, Europe's dynamic markets offer a wealth of opportunities and present a compelling investment case. Is now the time to capitalize on Europe? Find out how to navigate European (derivatives) markets and more with Eurex – see below under further information.Weiter zum vollständigen Artikel bei Deutsche Boerse AG Unsponsored American Deposit Weiter zum vollständigen Artikel bei Deutsche Boerse AG Unsponsored American Deposit