The Italian economy flatlined in the third quarter, adding to the body of evidence suggesting that eurozone growth also stagnated over the same period.

Gross domestic product was unchanged in the three months to September, according to a flash estimate, coming slightly below the consensus forecast of a 0.1 percent rise, after an unrevised 0.4 percent contraction in the previous quarter. Growth was also unchanged over the same period of 2022, the slowest annual showing since the Covid-infected 6.0 percent slump in the closing months of 2020.

Annual growth in the second quarter was revised downward slightly to show a 0.3 percent rise from the 0.4 percent previously reported.

Istat, the Italian statistical agency, provides little detail in its preliminary GDP estimate, but noted that a decrease in agricultural, forestry and fishing output was balanced by a somewhat unexpected improvement in the industrial sector. Net exports provided a boost to output, while private inventories exerted a negative influence.

The slightly-weaker-than-forecast Italian data come on the heels of an as-expected 0.1 percent increase in French GDP. Together the two series suggest that Eurozone flash output due for release later Tuesday is on course to meet market expectations of a flat performance in the third quarter.

Eurozone economic stagnation would only enhance the sense that the bloc's interest rates are unlikely to rise further. On Monday, European Central Bank Vice President Luis de Guindos repeated the company line that risks to growth are tilted to the downside.

The latest data leave the RPI at minus 15 and the RPI-P at minus 19, meaning that the Italian economy is underperforming market expectations.

Third-quarter GDP is expected to edge 0.1 percent higher on the quarter following 0.4 percent contraction in the second quarter.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. A flash estimate, providing just quarterly and annual growth rates together with some limited qualitative information on sector output, is usually available 6-7 weeks after the reference quarter.

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 anemic 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.