European Markets Steady Amid Economic Data, Germany's DAX Hits Record Close

European shares remained largely unchanged as investors assessed economic data and the European Central Bank's policy direction. Germany's DAX index hit a record close despite political uncertainties from state elections. Key sectors like real estate saw gains, while aerospace and defense experienced significant losses.

European shares remained largely unchanged on Monday as investors scrutinized economic data to gauge the European Central Bank's policy trajectory. Despite market neutrality, Germany's DAX index managed to close at a record high of 18,930.85, even as state elections introduced new political uncertainties.

The elections, which saw far-right AfD and leftist BSW gaining prominence, pose a serious challenge to Chancellor Olaf Scholz's coalition. Analysts at SEB have labeled this as a political wake-up call ahead of the next parliamentary elections, highlighting potential instability in the EU's leading duo, Germany and France.

On the economic front, Germany's manufacturing sector continues to struggle, and euro zone manufacturing remains in contraction. Market indications suggest a probable 25 basis-point rate cut by the ECB in September. Real estate stocks performed well, while aerospace and defense sectors lagged, partly due to a significant drop in Rolls-Royce shares.

(With inputs from agencies.)