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Eurozone markets hold firm as US and Middle-East tensions rise

Despite heightened geopolitical tensions in the Middle East, financial markets have remained broadly stable, with minimal disruption to eurozone economic indicators, an encouraging sign for the European interiors and furniture sectors, which depend on macroeconomic steadiness for both consumer and commercial investment confidence.

© MartinBergsma | Dreamstime

In ING's latest Rates Spark update (24 June 2025), analysts observed that 'the escalation in Iran this weekend didn't trigger sharp market moves, and Monday's attempts at de-escalation helped calm the markets further. Oil even ended the day lower than last week, with Brent falling back to US$70/bbl.' The muted response from energy markets suggests limited inflationary pressure on raw material and transportation costs, a relief for producers, suppliers, and retailers in the interiors' industry.

The ING report also highlighted that 'the overall economic picture in the eurozone remains one of weak but positive growth, and the data so far gives no reason for rates to deviate from this outlook.' Monday's purchasing managers' index (PMI) results reinforced this sentiment, with a eurozone composite score of 50.2, reflecting a fragile equilibrium. While not a surge, it provides some stability amid global uncertainties.

However, ING warns that lingering geopolitical risks could still affect confidence: 'Recent developments in the Middle East add to the uncertain economic backdrop, which we expect will continue to weigh on business confidence. But until the data turns into a material deterioration, we see no reason for markets to deviate from the expected European Central Bank landing zone of 1.75%.'

For the furniture and interiors sectors, especially those relying on European production or export, the evolving fiscal landscape may carry more significant implications. The EU confirmed a €70 billion bond funding plan for the second half of 2025. Notably, this includes support for Ukraine and Balkan reforms, but 'does not yet mention the SAFE defence loan programme explicitly.'

Meanwhile, Germany's draft budget outlines €846.9 billion in additional borrowing through to 2029, with 'an increase in annual defence spending to €170bn by 2029 to meet NATO's new 3.5% target.' While not directly tied to interiors, this reallocation of fiscal priorities could reshape future public sector investments in infrastructure, housing, and institutional design.

As the global macroeconomic and geopolitical environment evolves, interior design and furniture businesses across Europe are likely to remain cautiously optimistic, anchored by stable rates but attuned to shifting spending patterns and consumer sentiment.

More information:
ING
www.think.ing.com

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