European Economic Activity Slows Amid Geopolitical Tensions
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 24 2026
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Should l Buy GF?
Source: seekingalpha
- Germany's Activity Slowdown: Business activity growth in Germany slowed in March, indicating economic pressures that could impact future investment decisions and market confidence.
- French Economic Weakness: The French economy weakened in March due to intensified supply-side pressures, which may lead to a decline in consumer spending and affect overall economic growth.
- Euro Area PMI Misses Expectations: The Euro Area Composite PMI came in at 50.5 in March, below expectations, with manufacturing rising but services slipping, highlighting the fragility of the economic recovery.
- Energy Price Volatility: European natural gas futures rose to around €57.4 per MWh due to supply risks, while oil prices remain elevated, providing support to energy-heavy European indices.
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Analyst Views on GF
Wall Street analysts forecast GF stock price to rise
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About GF
The New Germany Fund, Inc. (the Fund) is a diversified, closed-end management investment company. The Fund seeks long-term capital appreciation primarily through investment in middle-market German equities. The focus of the Fund's investments lies within Germany. Under normal market conditions at least 80% of the Fund’s net assets are invested in equity or equity-linked securities. The Fund invests in range of sectors, which include aerospace and defense; auto components; automobiles; banks; building products; chemicals; electrical equipment; independent power and renewable electricity producers; insurance; Internet and direct marketing retail; information technology (IT) services, life sciences tools and services; metals and mining; real estate management and development; software; textiles, apparel and luxury goods; trading companies and distributors; diversified financial services; commercial services and supplies, and others. The Fund's investment advisor is DWS International GmbH.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
European Economic Data and Market Dynamics
- UK GDP Growth: The UK's GDP expanded by 1% year-over-year in Q4, indicating signs of economic recovery, which may bolster investor confidence despite global economic uncertainties.
- German Retail Sales: Germany's retail sales rose by 0.7% year-over-year, falling short of expectations, reflecting weak consumer spending that could impact future economic growth prospects.
- French Inflation Expectations: France's inflation is expected to surge to 1.7% year-over-year in March, potentially prompting policymakers to reconsider monetary policy in response to rising living costs.
- Market Sentiment Volatility: The pan-European Stoxx 600 index traded 0.74% higher but remained on track for its steepest monthly decline since 2020, indicating ongoing pressure from Middle East tensions and surging energy prices on investor sentiment.
See More
Euro Area Inflation Rate Rises to 2.5%
- Inflation Rate Increase: In March 2026, the Euro Area inflation rate rose to 2.5% from 1.9% in February, although lower than the expected 2.6%, indicating signs of economic recovery that may influence the European Central Bank's monetary policy decisions.
- Core Consumer Prices: Core consumer prices increased by 2.3% year-on-year in March 2026, suggesting sustained growth in consumer spending, which could drive business investment and economic growth.
- Monthly CPI Growth: The Consumer Price Index (CPI) rose by 1.20% in March 2026 compared to the previous month, reflecting an increase in demand for goods and services in the short term, which may impact future inflation expectations.
- Market Reaction: Following the release of Euro Area inflation data, market reactions to the euro were cautious, as investors weighed Trump's oil threats and adopted a neutral stance on market outlook, potentially leading to fluctuations in the EUR/USD exchange rate.
See More
Germany's Unemployment Rate Steady at 6.3%
- Unemployment Rate Steady: Germany's unemployment rate remained unchanged at 6.30% in March, aligning with expectations and indicating labor market stability despite other economic challenges, showcasing the effectiveness of government policies in maintaining employment.
- Exchange Rate Dynamics: The EUR/USD found support above 1.1495, potentially pushing the exchange rate towards the 'expanding wedge' range resistance, reflecting cautious optimism in the market regarding the Eurozone's economic outlook.
- Rising Inflation Expectations: France's inflation rate is expected to surge to 1.7% year-on-year in March, which may influence the European Central Bank's monetary policy decisions and heighten market concerns about inflation.
- Neutral Market Sentiment: European markets started the week in neutral gear as investors weighed risks against Trump's oil threats, indicating uncertainty in market sentiment regarding future economic trends.
See More
Analysis of Germany's Retail Sales Data
- Retail Sales Growth: In February 2026, Germany's retail sales increased by 0.70% year-over-year, falling short of the 1% estimate, indicating weak consumer spending growth that could undermine economic recovery confidence.
- Month-over-Month Decline: Retail sales in Germany decreased by 0.60% month-over-month, missing the 0.2% growth forecast, reflecting short-term consumer demand weakness that may lead to a slowdown in economic growth.
- Market Reaction: Following the release of Germany's retail sales data, the EUR/USD found support above 1.1495, indicating cautious optimism in the market regarding future trends, potentially pushing the exchange rate towards the 'expanding wedge' resistance range.
- Investor Sentiment: European markets started the week in neutral gear as investors weighed Trump's threats regarding Iran, maintaining a wait-and-see approach that could impact short-term investment decisions and market volatility.
See More
European Markets Steady Amid Rising Oil Prices and Inflation Concerns
- Cautious Market Sentiment: Investor caution has intensified as President Trump mentioned the potential seizure of Iran's oil resources, leading to oil prices surging to their highest levels since 2022, which raises inflation concerns.
- Stable Stock Market Performance: The London stock market rose by 0.74% to 10,042.12, Germany's DAX increased by 0.04% to 22,324.61, and France's CAC climbed by 0.36% to 7,729.84, indicating market focus on upcoming economic data.
- Retail Sales Data: Spain's retail trade increased by 2.2% year-on-year in February, down from 3.8% in January and below analysts' expectations, while Sweden's retail sales rose by 2.4%, also lower than the previous month's 3.9%, reflecting a trend of slowing consumer spending.
- Economic Indicator Changes: Switzerland's KOF Economic Barometer fell to 96.1 in March, the lowest since June 2025, indicating potential economic slowdown, and market expectations regarding ECB policy have shifted significantly.
See More
European Markets Mixed as Trump Delays Iran Strike
- Market Volatility: European equity markets exhibited mixed performance on Friday as President Trump postponed a planned strike on Iranian energy infrastructure until April 6 to facilitate ongoing negotiations, highlighting market sensitivity to geopolitical risks.
- Retail Sales Decline: UK retail sales volumes fell by 0.4% month-on-month in February 2026, following a revised 2% increase in January, indicating that fluctuations in consumer confidence may impact the pace of economic recovery.
- Rising Inflation: Spain's annual inflation rate surged to 3.3% in March, the highest since June 2024, exceeding market expectations of 3.7%, which could influence the European Central Bank's monetary policy decisions.
- Natural Gas Futures Rise: European natural gas futures climbed to €56.6 per MWh, extending gains from the previous session, reflecting the ongoing uncertainty in the Middle East's geopolitical landscape and its impact on energy markets.
See More
European Economic Data and Market Dynamics
- UK GDP Growth: The UK's GDP expanded by 1% year-over-year in Q4, indicating signs of economic recovery, which may bolster investor confidence despite global economic uncertainties.
- German Retail Sales: Germany's retail sales rose by 0.7% year-over-year, falling short of expectations, reflecting weak consumer spending that could impact future economic growth prospects.
- French Inflation Expectations: France's inflation is expected to surge to 1.7% year-over-year in March, potentially prompting policymakers to reconsider monetary policy in response to rising living costs.
- Market Sentiment Volatility: The pan-European Stoxx 600 index traded 0.74% higher but remained on track for its steepest monthly decline since 2020, indicating ongoing pressure from Middle East tensions and surging energy prices on investor sentiment.
See More
Euro Area Inflation Rate Rises to 2.5%
- Inflation Rate Increase: In March 2026, the Euro Area inflation rate rose to 2.5% from 1.9% in February, although lower than the expected 2.6%, indicating signs of economic recovery that may influence the European Central Bank's monetary policy decisions.
- Core Consumer Prices: Core consumer prices increased by 2.3% year-on-year in March 2026, suggesting sustained growth in consumer spending, which could drive business investment and economic growth.
- Monthly CPI Growth: The Consumer Price Index (CPI) rose by 1.20% in March 2026 compared to the previous month, reflecting an increase in demand for goods and services in the short term, which may impact future inflation expectations.
- Market Reaction: Following the release of Euro Area inflation data, market reactions to the euro were cautious, as investors weighed Trump's oil threats and adopted a neutral stance on market outlook, potentially leading to fluctuations in the EUR/USD exchange rate.
See More
Germany's Unemployment Rate Steady at 6.3%
- Unemployment Rate Steady: Germany's unemployment rate remained unchanged at 6.30% in March, aligning with expectations and indicating labor market stability despite other economic challenges, showcasing the effectiveness of government policies in maintaining employment.
- Exchange Rate Dynamics: The EUR/USD found support above 1.1495, potentially pushing the exchange rate towards the 'expanding wedge' range resistance, reflecting cautious optimism in the market regarding the Eurozone's economic outlook.
- Rising Inflation Expectations: France's inflation rate is expected to surge to 1.7% year-on-year in March, which may influence the European Central Bank's monetary policy decisions and heighten market concerns about inflation.
- Neutral Market Sentiment: European markets started the week in neutral gear as investors weighed risks against Trump's oil threats, indicating uncertainty in market sentiment regarding future economic trends.
See More
Analysis of Germany's Retail Sales Data
- Retail Sales Growth: In February 2026, Germany's retail sales increased by 0.70% year-over-year, falling short of the 1% estimate, indicating weak consumer spending growth that could undermine economic recovery confidence.
- Month-over-Month Decline: Retail sales in Germany decreased by 0.60% month-over-month, missing the 0.2% growth forecast, reflecting short-term consumer demand weakness that may lead to a slowdown in economic growth.
- Market Reaction: Following the release of Germany's retail sales data, the EUR/USD found support above 1.1495, indicating cautious optimism in the market regarding future trends, potentially pushing the exchange rate towards the 'expanding wedge' resistance range.
- Investor Sentiment: European markets started the week in neutral gear as investors weighed Trump's threats regarding Iran, maintaining a wait-and-see approach that could impact short-term investment decisions and market volatility.
See More
European Markets Steady Amid Rising Oil Prices and Inflation Concerns
- Cautious Market Sentiment: Investor caution has intensified as President Trump mentioned the potential seizure of Iran's oil resources, leading to oil prices surging to their highest levels since 2022, which raises inflation concerns.
- Stable Stock Market Performance: The London stock market rose by 0.74% to 10,042.12, Germany's DAX increased by 0.04% to 22,324.61, and France's CAC climbed by 0.36% to 7,729.84, indicating market focus on upcoming economic data.
- Retail Sales Data: Spain's retail trade increased by 2.2% year-on-year in February, down from 3.8% in January and below analysts' expectations, while Sweden's retail sales rose by 2.4%, also lower than the previous month's 3.9%, reflecting a trend of slowing consumer spending.
- Economic Indicator Changes: Switzerland's KOF Economic Barometer fell to 96.1 in March, the lowest since June 2025, indicating potential economic slowdown, and market expectations regarding ECB policy have shifted significantly.
See More
European Markets Mixed as Trump Delays Iran Strike
- Market Volatility: European equity markets exhibited mixed performance on Friday as President Trump postponed a planned strike on Iranian energy infrastructure until April 6 to facilitate ongoing negotiations, highlighting market sensitivity to geopolitical risks.
- Retail Sales Decline: UK retail sales volumes fell by 0.4% month-on-month in February 2026, following a revised 2% increase in January, indicating that fluctuations in consumer confidence may impact the pace of economic recovery.
- Rising Inflation: Spain's annual inflation rate surged to 3.3% in March, the highest since June 2024, exceeding market expectations of 3.7%, which could influence the European Central Bank's monetary policy decisions.
- Natural Gas Futures Rise: European natural gas futures climbed to €56.6 per MWh, extending gains from the previous session, reflecting the ongoing uncertainty in the Middle East's geopolitical landscape and its impact on energy markets.
See More
