Investor morale stays strong across Eurozone - Sentix
Investor sentiment across the Eurozone has strengthened for a fifth consecutive month, a closely-watched survey published on Monday showed.
The Sentix Economic Index was 29.8 in July, an improvement on June’s reading of 28.1 and the fifth increase in a row. It was also the highest since February 2018, although it narrowly missed consensus, for 30.0.
Within that, the current situation index jumped to 29.8 from 21.3 a month previously – the highest since October 2018 – but the expectations index declined to 29.8 from 35.3, the lowest since December.
Among individual Eurozone members, Germany – the bloc’s biggest economy – had an overall index of 33.8, compared to 32.9 in June. But its expectations index also fell, to 30.0 from 36.3.
Manfred Hübner, managing director at Sentix, said: “Huge government investment, supported by continued expansionary monetary policy from the European Central Bank, has stabilised the Eurozone economy during the corona lockdowns.
“This has particularly benefited the manufacturing sector over the past 12 months. With the removal of a large number of restrictions, the service and trade sectors are now following suit.
“Nevertheless, we are approaching a certain point of maximum momentum in the short term. Investors’ expectations, that this good situation can improve further, while still clearly positive, drops to 29.8 points. For the economy as a whole this is not yet a worrying decline. For the equity markets, on the other hand, which are very much focused on investor expectations, this development could contribute to increased market volatility.”
Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: “The headline still looks robust, but we now see clear evidence of weakness at the margin.
“The expectations gauge fell for a second month on the spin, leaving the current situation index to do the heavy lifting. This is an important signal. It suggests that investor sentiment and near-term market expectations are now softening, a shift which often precedes higher volatility and a change in momentum of headline economic data.”
Sentix surveyed 1,114 investors, 256 of which were institutional investors, between 1 and 3 July.