Eurozone Growth Boosts Stocks, but Risks and Tensions Remain

European stocks took a step back despite a boost in economic growth for the eurozone. The region's economy grew by 0.4% quarter-on-quarter in Q2, up from flat in Q1, according to Eurostat. This also marks an increase in year-on-year growth, reaching 1.0% in the euro area and 1.2% in the EU.

The Stoxx Europe 600 fell 0.3%, but country-specific indices showed mixed results. Germany's DAX rose 0.4%, while Switzerland's main index dropped 0.7%. This discrepancy can be attributed to company-specific news, with Nokia taking a hit after a Finnish newspaper reported plans to shut a Hangzhou research site by end-2026 and cut jobs.

Energy names also experienced market fluctuations due to separate updates from Shell, Eni, and BP on exploration and gas projects. Despite the positive GDP print, the 'risk premium' rose as investors focused on Middle East tensions and company-specific news, leading to muted index moves and bigger gaps between markets.