After private-sector activity diminished for the third-straight month in April, the Eurozone economy may be in for a period of weakness and potentially drag down European markets and related exchange traded funds.
Europe-related ETFs have been relatively stable in recent weeks. Over the past month, Vanguard FTSE Europe ETF (NYSEArca: VGK) rose 2.7%, iShares MSCI EMU ETF (NYSEArca: EZU) gained 3.0% and SPDR EURO STOXX 50 (NYSEArca: FEZ) advanced 3.6%.
However, economic activity is slowing and could weight on future gains. A composite purchasing managers’ index came in at 55.1, below the flash estimate of 55.2 and the lowest since January 2017, Bloomberg reports. The slowdown was due to services, where the gauge slipped more than initially estimated to 54.7. Nevertheless, the readings remained above 50, which signaled an expansion.
IHS Markit, which compiled the PMI, said euro-region growth remains “solid,” but added that two forward-looking indicators – backlogs of work and business expectations – had pulled back.