European equity markets experienced a downturn on May 22, 2025, influenced by weak eurozone economic data and increasing bond yields. The pan-European STOXX 600 index decreased by 0.8%, moving away from its recent two-month high. This decline was influenced by soft business sentiment data and elevated government bond yields.
The flash composite Purchasing Managers' Index (PMI) from Hamburg Commercial Bank (HCOB) fell to 49.5 in May, a decrease from 50.4 in April. This indicates a return to contraction territory, with activity falling below the 50-point threshold. The services sector, a key driver of the eurozone's economic resilience, experienced a notable decrease in demand.
Investor sentiment was further impacted by proposed tax reforms in the United States, raising concerns about federal borrowing. Yields on 10-year US Treasury notes reached a three-month high. In company news, Johnson Matthey's shares increased 28% after announcing the sale of a business unit to Honeywell International for £1.8 billion ($2.4 billion). Conversely, Embracer Group fell by 15.3% after forecasting marginal revenue growth. Freenet AG dropped 14.8% following disappointing first-quarter earnings.