France’s economy stagnated in the first quarter, missing expectations for 0.2% growth from the previous quarter and underscoring the fragility of the euro-area recovery. Across the bloc, the Eurozone expanded 0.1%, with Spain leading at 0.6% and Germany posting 0.3% growth, offering only limited reassurance as higher energy costs and weak demand continue to weigh on activity.
The soft data come as central banks remain in wait-and-see mode. The Federal Reserve left interest rates unchanged on Wednesday, and the Bank of England followed suit today. The European Central Bank, which is meeting later, is also widely expected to keep rates on hold as policymakers weigh persistent inflation against deteriorating growth.
In Germany, the unemployment rate rose to 6.4%, the highest level since the pandemic peak, adding to signs that Europe’s largest economy is losing momentum. The labor-market deterioration is likely to strengthen calls for fiscal support, even as Berlin remains constrained by weaker investor sentiment and rising energy insecurity.
Earnings from the U.S. technology sector painted a mixed picture. Alphabet and Microsoft both beat expectations, reinforcing confidence in digital advertising, enterprise software and AI-related demand.
By contrast, Meta Platforms fell more than 6% in after-hours trading after investors reacted negatively to a sharp increase in AI-related capital expenditures, reviving concerns over the cost of the sector’s infrastructure buildout.