Europe has been at the forefront of headlines around the world, as their debt crisis has been one of the most significant market movers over the past two years. Recently, Greece was granted a second bailout in an effort to bring stability to its economy, though many are unconvinced that this will be enough to permanently shelf the issues weighing on the euro. Investors will look to key economic data from the currency bloc this week to get a better idea for how the crisis has impacted the nation group as a whole, and today will bring one of the most significant data points [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].
Euro zone GDP is slated to hit markets today, as investors all around the world will be anxiously awaiting the results to see how euro woes have impacted the surrounding region. GDP is one of the most important economic indicators, as it provides insights into the trends of a specific economy as well a comprehensive look on the output of the region. But aside from the result of the report itself, the outlook given can be nearly significant as the figure itself, as a weak outlook can erase a surprise jump and vice versa.
Today’s report is slated to hold steady at a disappointing -0.3%, the same as last quarter. Note that the success or lack thereof of GDP reports is usually relative, meaning that a result of -0.2% would still be good news, despite being negative. That being said, if the report comes in as expected or worse, it will point to stagnant growth and the inability to cope with a weak euro, while a positive report could suggest a turning point for the countries across the pond. After U.S. GDP was able to make a surprise jump, the same result in the Euro zone could spark a buying trend through out markets [see also Tax Reform And Dividend ETFs: Cause For Concern?].
In light of this major data release, today’s ETF to watch will be the MSCI EMU Index Fund (EZU). This fund tracks the largest securities in the countries that have adopted the euro as their currency. As such, top holding of the fund include big names like Total SA, Siemens AG, and Banco Santander among others. Note that EZU has a slight bias towards financial equities, which could make it more volatile on the day depending on the direction of the report. If GDP is able to surprise, EZU should be in for a strong session, but a miss or negative guidance will likely put pressure on this fund for several days to come.
Disclosure: No positions at time of writing.