European Equities Sink As Economy Falters In Q1, Germany CPI Rises Less Than Expected Hurting Euro

European equities slumped on Friday as preliminary GDP data for the eurozone showed a slightly lower-than-expected increase in the first quarter, while German preliminary GDP data fell well short of expectations. In Germany, the preliminary consumer price index (CPI) statistics reveal a lower-than-expected inflation rate in April. 

What To Know: 

• The Eurozone GDP in Q1 2023 was 0.1% quarter-on-quarter annualized, falling short of 0.2% growth projections and adding to concerns about an economic slowdown in the region. In annual terms, the Eurozone GDP rose 1.3%, down from 1.8% in Q4 2022, and below estimates of 1.4%.
• The Germany GDP in Q1 2023 was flat, below expectations of 0.2% surge. In annual terms, the Germany GDP rose 0.2%, down from 0.3% in Q4 2022, and below estimates of 0.8%. 
• France's GDP grew by 0.2%, while Italy and Spain grew by 0.5% each. 
• The preliminary CPI print in Germany came in at 7.2% year-on-year in April, lower than 7.3% expected, and a surge of 0.4% month-on-month, lower than 0.6% expected. 

Market reactions: 

The Euro Stoxx 50 Index, which is mirrored by the iShares MSCI Eurozone ETF EZU, dropped 1.3%.

Among country equity markets, the French CAC 40, which is tracked by the iShares MSCI France ETF EWQ, was the underperformer, declining 1.4%. 

Among sectors, banks experienced the largest losses, with a benchmark of European banks down 2.5%. 

The euro fell below 1.10 against the dollar, with the Invesco CurrencyShares Euro Currenty Trust ETF FXE expected to open lower in the U.S. market on Friday. 

Markets now await the publication of the Fed's preferred inflation indicator, the Personal Consumption Expenditure (PCE) index for the United States, which is scheduled for 08:30 ET time. 

Read now: March PCE Price Index Preview: Here's Why Fed's Favorite Inflation Gauge Is A Key Market-Moving Event Before FOMC

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