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Eurozone Investor Confidence Post Moderate Recovery

James Boston
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Eurozone Investor Confidence Post Moderate Recovery

Early indicators are pointing to a slight recovery in investor sentiment within the Eurozone. The Sentix Investor Confidence indicator just published remains deep in negative territory but the latest reading is showing some signs of improvement, the current month reading has been announced as -11.9, this represents a moderate improvement in perceived conditions when compared to last month’s year and a half low of -13.7, the consensus estimate was for a more gradual improvement to just -13.5 in these latest numbers.

The Sentix report is pointing to some “cautious optimism” for the Eurozone despite the fact that the dangers of recession have not been completely overcome. A rise in longer term optimism among the business community is being cited as the reason that the indicator has posted it’s first moderate improvement since July. Sentix notes that the European Central Bank’s (ECB) announcement last week that it is preparing to further inflate it’s balance sheet has injected some confidence into the market while the an announcement by the Bank of Japan that it will be taking further liquidity enhancing measures has contributed to optimism for a global pick up, the index for the US too is showing long term optimism and this is also assisting the case for a positive global outlook.

A positive turn in sentiment in the Eurozone’s largest economy, Germany, is being cited by Sentix as an additional contributing factor towards this month’s slight recovery in the Eurozone numbers. The overall index for Germany has risen to 9.8 this month from a recent low of 5.4 last month, more to the point the German Expectations index has recovered from it’s pessimistic -7.8 level to read at a positive 1.0 this month. The Ukrainian situation remains a risk factor for Germany, according to the Sentix report, but this appears to now be fully priced in so in the absence of an unforeseen escalation it is likely to have only a moderate effect on future readings.

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