Eurozone investor sentiment falls less than expected

The Sentix investor sentiment index fell to -21.9 from -21.5 in September, coming in ahead of consensus expectations for a reading of -24.0.

The headline index was weighed down by a drop in the current situation index to -27.0 in October from -22.0 in September. Meanwhile, the expectations index pushed up to -16.8 from -21.0.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "We do not have a full country breakdown but we do know that Germany’s headline rose, to -31.1 from -33.1 in September, on the back of a rebound in the expectations index. Still, the press release notes that the German current situations index - which fell for the sixth straight month - was at its lowest since July 2020, in the midst of the first Covid lockdowns and that the overall index remains much lower than the index for the EZ as a whole.

"In other words, investors think that the German economy will hold back the EZ average again in Q4. We currently expect both German GDP and EZ GDP to rise by 0.1% quarter-on-quarter after falling by 0.3% in Q3, but the risks to this forecast are clearly to the downside. More generally, the EZ Sentix index remains consistent with our view that weak GDP growth will weigh on EZ equities in the next three months or so."