Markets Today: Euro Area Business Growth Stalls, DAX Eyes ATH, BoC Decision Next

[Redator]

Asian Market Wrap

Asian equities broke a four-day losing streak as markets drew some optimism from positive US labor data. The labor data appeared to soothe market concerns around a global slowdown, even if the move proves temporary it is a welcome one.

South Korea's KOSPI index rose over 2%, reaching its highest level since August 2024. This also pushed the MSCI index of Asia-Pacific shares (excluding Japan) up by nearly 1%.

In Japan, the Nikkei index gained 0.8%, while Taiwan's stock market jumped 2%, following a boost in U.S. stocks on Tuesday thanks to AI giant Nvidia.

Toyota's shares dropped by up to 13%, the biggest fall in nine months, after announcing a privatization deal. Investors and analysts criticized the plan, saying it undervalues the company.

On Wednesday, the dollar rose slightly by 0.18% against the yen, reaching 144.225. The euro stayed steady at $1.1368.

The dollar index, which tracks the dollar against six major currencies, was at 99.31, close to its six-week low of 98.58 from Monday. So far this year, the index has dropped 8.5%.

/media/images/2025-06-04_09_36_10-Window.width-1400.png

Source: LSEG

In commodities, oil prices fell due to increased OPEC+ production and worries about the global economy caused by tariff issues. Brent crude dropped 0.38% to $65.38 per barrel, while U.S. West Texas Intermediate crude fell 0.41% to $63.15 per barrel. For more on this, read OPEC+ Oil Production and Brent Crude: Key Factors Driving Price Fluctuations

Gold stayed mostly unchanged at $3,351.5 per ounce, with a huge 28% gain this year as investors look for safe options. Without clarity on the recent uptick in hostilities between the US-China, Gold is likely to hold the high ground and remain supported.

Trade deals have so far failed to materialize with today being the deadline for US trading partners to submit proposals for trade deals to avoid tariffs which are set to come into play in five weeks time.

We have heard deals are close with certain countries and markets will no doubt be keeping an eye on any proposals submitted and the reaction by US officials.

This coupled with the hopes that a possible call between US President Trump and Chinese counterpart Xi Jinping and risk sentiment remains very much on a knife edge for now.

The European Open

European stocks edged higher on Wednesday, helped by a 3.4% rise in Airbus shares. This came after reports that Chinese airlines might order hundreds of planes as early as next month.

The STOXX 600 index gained 0.3% by early morning, up about 15% since its April lows, thanks to U.S. President Trump pausing major tariffs and making a trade deal with the UK. Most sectors in Europe saw gains, with mining and technology stocks leading the way.

Euro Area PMI Data

Business activity in the euro zone barely grew in May, as the services sector shrank for the first time since November due to weak demand that has been an issue for a year, according to a survey.

The HCOB Eurozone Composite PMI, which measures business activity, dropped to 50.2 in May from 50.4 in April. While this was better than an earlier estimate of 49.5, it was still the weakest since February. A PMI above 50 means growth, while below 50 signals a decline. The services sector's activity fell to 49.7 from 50.1, showing a slight contraction for the first time in six months.

/media/images/2025-06-04_10_04_44-Window.width-1400.png

Source: HCOB, S&P PMI

New business across the euro zone has been declining since June 2024, though at a slow pace. The new business index dipped to 49.0 in May from 49.1. Foreign orders have been falling for over three years, adding to the economic struggles.

Companies worked through their existing orders faster to make up for the lack of new work. The services backlog of orders dropped further, with its index falling to 47.4 from 48.1.

Among the biggest euro zone economies, only southern countries showed growth. Italy saw its fastest growth in over a year, while Spain's growth slowed to its weakest in 17 months. France showed signs of stabilizing with its smallest decline in nine months, but Germany slipped back into decline.

Employment in the euro zone grew slightly in May, mainly in the services sector, while manufacturers cut jobs. Business confidence improved for the first time since January but stayed low, as companies remain cautious about the future despite hopes for interest rate cuts and government support

Economic Data Releases and Final Thoughts

Looking at the economic calendar, the rest of the day sees focus shift to North American data.

The US session will bring services PMI to the fore. The US ISM services index is expected to slightly increase to 52.0 in May, up from 51.6 in April. However, recent weak manufacturing data might have lowered these expectations.

The US being a predominantly service based economy means that the reading is likely to stoke some volatility and provide actual insight into the health of the US economy.

We also have the Bank of Canada rate decision where markets are divided as to what decision we may get. According to LSEG data, market participants are pricing in a 73% probability that rate will remain at 2.75%.

/media/images/2025-06-04_10_16_01-Window.width-1400.png

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Given that today is the deadline for trade deal proposals keep an eye out for any developments on that front which could have a significant impact on overall sentiment.

Chart of the Day - DAX Index

From a technical standpoint, the Dax has now recorded two consecutive daily candle closes above the 24000 handle with both candle closing as hammer candlesticks.

This would hint at further upside with the DAX trading 0.80% higher on the day with fresh all-time highs now a definite possibility.

A break of the May 29 high at 24390 could face resistance at 24500 before the 24750 and 25000 handles come into focus.

There is no historic price action to analyse above 24390 which means i will be focusing on significant whole numbers as areas of interest. Markets tend to be attracted to these levels.

The RSI remains shy of overbought territory for now which does bode well for bulls eyeing fresh all-time highs.

Immediate support rests at 24000 and the 20-day MA at 23897.

DAX Index Daily Chart, June 4, 2025

/media/images/DE30EUR_2025-06-04_10-34-11.width-1400.png

Source: TradingView.com (click to enlarge)

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© {CURRENT_YEAR} OANDA Business Information & Services Inc.