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Eurozone Investor Sentiment Hits 34-Month High: Sentix

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Eurozone Investor Sentiment Hits 34-Month High: Sentix

Investor confidence in the Eurozone unexpectedly rose this month, a sign investors are more upbeat about the currency bloc’s recovery efforts.

Sentix’s gauge of institutional investor sentiment increased from 11.9 to 13.3, the highest level since August 2011. Economists in a Reuters poll forecast a drop to 10.7. A reading above zero indicates optimism, whereas a reading below that level denotes pessimism. Nearly 1,000 investors and financial analysts took part in the February survey.

Investors’ appraisal of the current situation improved considerably, with a slim majority of respondents saying the economic situation in the Eurozone is good again. The current situation sub-index in February rose from -0.8 to 1.8, Sentix data showed. The sub-index for expectations, meanwhile, rose only slightly, from 25.3 to 25.5.

Investors’ improved outlook is probably a reflection of broadening recovery in the Eurozone, which now appears to be touching peripheral nations. The Eurozone manufacturing industry rose to a 32-month high last month, led by deepening recovery in Germany and broad improvements in southern Europe.

“Investors are perceiving a further improvement in the troubled single currency bloc in February,” said Sentix senior analyst Sebastian Wanke. However, “investors feel that deflation remains a threat for the [Eurozone] economy.”

Persistently low inflation has been a chronic issue for policymakers at the European Central Bank. Inflation slowed in January from 0.8 percent to 0.7 percent, well below the central bank’s 2 percent target. The ECB decided to hold off on introducing new policy changes at this month’s rate decision, opting instead to wait for further information that will become available in early March.

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