The composite purchasing managers' index (PMI) released by S&P Global and HCOB in June was only 50.2, with almost no signs of growth. This is the second consecutive month of economic stagnation in the eurozone. The service industry PMI has just rebounded to the boom-bust line of 50.0, with only a slight improvement; the manufacturing PMI has fallen to 49.4, reflecting a further contraction in manufacturing activities.

At the national level, new orders for German manufacturing have rebounded, driving a slight recovery in manufacturing activities, and Germany's composite PMI has risen slightly to 50.4; but France continues to shrink, and both services and manufacturing have not stopped falling. The composite PMI this month is 48.5. Overall demand has declined for 13 consecutive months, with only a mild decline.

Economic and policy implications

• The short-term economic marginal improvement is limited, and the eurozone growth continues to remain in a very weak state.

• Core inflation has fallen below the ECB's 2% target. The ECB has temporarily suspended policy easing, but has not ruled out the possibility of future interest rate cuts.

• ECB monetary officials (such as Centeno and Nagel) pointed out that if the industry does not improve or prices further decline, more easing measures may be needed.

Investors should pay attention to the direction

• ECB policy trends: If inflation continues to be low, the ECB will have room to cut interest rates again this year, and the market will deepen expectations.

• National differences bring stock selection opportunities: Germany's manufacturing industry has recovered relatively, and you can pay attention to its rotation ETF or leading companies.

• European debt and euro exchange rate: If Europe further eases, the euro may be under pressure; the bond market will be more volatile, and investors can allocate short-term European debt ETFs.