The preliminary flash data proved stronger than expected. A 0.3 percent quarterly rise in GDP was 0.2 percentage points stronger than the market consensus and the best performance since the third quarter of last year. Technical recession was revised away with a slight upward adjustment to the first quarter rate (now flat) but annual growth still almost halved from 1.1 percent to just 0.6 percent, its worst mark since the first quarter of 2021.

As it is, overall growth masked a quarterly contraction in Italy (0.3 percent) and stagnation in Germany. Consequently, the improvement came largely courtesy of France (0.5 percent), which would have been negative but for a jump in net exports, and Spain (0.4 percent). Elsewhere the picture was very mixed with sizeable gains in the likes of Ireland (3.3 percent) and Lithuania (2.8 percent and no longer in recession) contrasting with falls in Latvia (0.6 percent), and Austria (0.4 percent).

In sum, while the headline data clearly surpassed market expectations, the underlying picture is probably rather weaker and domestic demand was most likely still soft. In fact, today's report puts the Eurozone ECDI at 7 and the ECDI-P at minus 11, the latter showing that overall real economic activity continues to lag the forecasters' predictions.

Second-quarter Eurozone GDP is expected to expand only 0.1 percent on a quarterly basis for year-over-year growth of 0.4 percent.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There are two preliminary estimates which are based on only partial data. The first is the preliminary flash, introduced in April 2016 and limited to just quarterly and annual growth statistics for the region as a whole. This is issued close to the end of the month immediately after the reference period. The second flash report, released about two weeks later, expands on the first to include growth figures for most member states but still provides no information on the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anaemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.