ECB Stimulus Benefits Germany and Retail Sales Rise: EWG Up 0.41%

Key Update for Investors: Greek Referendum and China’s Rate Cut

(Continued from Prior Part)

Eurozone continues to strengthen on fundamentals

Although the equity markets in the Eurozone (FEZ) may be in volatile territory due to the Greek (GREK) crisis, fundamentals in the Eurozone continue to strengthen. Economic indicator readings from the Eurozone have largely been positive in recent months.

On June 26, the German Federal Statistical Office came out with yet another positive reading in retail sales data. The iShares MSCI Germany ETF (EWG) was up 0.41% at the close of trade on Friday. In Germany, retail sales rose by 1.7% in April—compared to the previous month.

Retail sales rose by 1.7% in Germany

German retail sales rose by 1.7% on a month-over-month basis. In April, they rose 1% on a YoY (year-over-year) basis. The country’s robust labor market, low interest, and inflation rate are supporting German shippers’ willingness to spend. This is good for multinational retailers like Amazon (AMZN), Nike (NKE), and Staples (SPLS) that draw sales revenue from the area.

Equity is up, but bonds are down

While strengthening fundamentals were able to lift equities in Germany, German bunds reached record highs over the weekend. The yield on the ten-year German government bond rose to a high of 0.944% on June 26 amid rising concerns over a Grexit—Greece exiting the Eurozone. Prices fall when yields rise. The spread between the safe-haven German bund and the Greek ten-year sovereign narrowed down to 10.85% on June 26.

In the next part of this series, we’ll assess a key indicator from China—an economy facing landslide market movement these days.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Greece Announces a Referendum, Capital Controls Are Imposed

• Part 2 - Consumer Sentiment Shines on Wall Street: Upbeat in June

• Part 3 - Italy’s Consumer Confidence Isn’t Impacted by the Greek Crisis