The preliminary flash data proved just strong enough for the Eurozone to avoid recession at the end of last year. A zero quarterly change was marginally stronger than the market consensus and followed an unrevised 0.1 percent decline in the previous period. Even so, annual growth was up only a tick at 0.1 percent and, to all intents and purposes, the economy has flatlined since the third quarter of 2022.

Overall quarterly stagnation masked some sharp divergences between the individual member states. Hence, Ireland (already in recession) contracted 0.7 percent and both Lithuania and, crucially, Germany declined 0.3 percent while Portugal advanced fully 0.8 percent and Spain 0.6 percent. Elsewhere, France was only flat but Italy expanded 0.2 percent.

In sum, the limited fourth quarter data confirm a pretty miserable end to 2023 by the Eurozone economy. Moreover, most leading indicators currently point to little better at the start of 2024. Still, the ECB will not be too disappointed as it will see sluggish demand as helping it to achieve its 2 percent inflation target. That said, with the region's RPI now at minus 10 and the RPI-P at minus 13, risks to economic activity in general are slightly on the downside.

Fourth quarter Eurozone GDP is expected to contract a quarterly 0.1 percent leaving total output unchanged from a year ago. Both readings would match their respective final posts in the previous quarter.

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.