Upbeat outlook boosts confidence among Eurozone investors

Investor sentiment has strengthened in the Eurozone, a widely-respected survey showed on Monday, beating expectations.

The November Sentix Economic Index came in at 18.3, up on October’s reading of 16.9 and well ahead of consensus expectations of 15.5.

Within that, the current situation index eased to 23.5, the weakest since June, from October’s 26.3. But investors were far more optimistic going forward, and the expectations index jumped to 13.3 from 8.0.

The overall index for Germany - the Eurozone’s largest economy - was 19.7, the fourth consecutive decline in a row and the lowest since March. The country’s current situation index was also lower, falling to 24.8 from 31.0. But expectations jumped from 9.5 to 14.8.

Patrick Hussy, managing director at Sentix, said: "The economic slowdown is slowly coming to an end. Supply bottlenecks and high inflation are causing problems for companies, and are having a certain braking effect. However, investors only expect a temporary burden and are therefore somewhat more confident about the next six months."

He added: "This confirms our thesis for the global economy, that the recent slowdown is a mid-cycle slowdown. Economic expectations re rising, especially in the USA, but also in Asia."

The US index was 25.3, compared to October’s 21.3, while the Asia index was 19.6, up on 15.7 a month earlier.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Investor sentiment has turned a corner.

"The fall in the current situation index, alongside rising expectations, is a sign that markets believe economic growth will slow in the fourth quarter - as we do - but that they also do not expect the slowdown to last into next year.

"It is different to tell where the sentix index will go in the coming months, but with downside risks to the economic outlook rising, especially now that virus cases are rising sharply across Europe, we think it is more likely that not that the sentix will fall back again in December."

Sentix surveyed 1,095 investors, 258 of which are institutional investors, between 4 and 6 November.