Eurozone investor sentiment slides back in September

The euro area investor sentiment index reached -21.5 in September, falling from -18.9 in August and below consensus expectations for -19.6.

Germany’s index specifically fell for the fifth straight month, which suggested the increase in August, which followed four straight declines, was just a “blip”, according to Pantheon Macroeconomics.

The eurozone headline was dragged lower by a fall in both the expectations gauge, to -21 from -17.3, and the current situation index, to -22 from -20.5.

“We do not have a full country breakdown but we do know that Germany’s headline fell, to -33.1 - its lowest since October 2022 - from -30.7, on the back of a plunge in the current situation index to its lowest since July 2020,” said Pantheon’s senior Europe economist Melanie Debono.

“The press release notes that the only time the German current situations index was lower, was during the global financial crisis of 2008-2009, and that investors have little hope that the situation will change quickly ‘as expectations are also stagnating’.”

Debono said Pantheon’s forecasts were in line with investor views.

“We think GDP will fall in Germany in the third quarter, dragging the eurozone number lower too.

“All told, the rebound in investor sentiment in the eurozone early in the third quarter seems to be reversing already.

“The Sentix index remains consistent with our view that weak GDP growth and likely further monetary policy tightening will weigh on eurozone financial markets in the next three months.”

Reporting by Josh White for Sharecast.com.