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Investor sentiment rises across Eurozone, but outlook remains uncertain

By Abigail Townsend

Date: Monday 06 Jul 2020

Investor sentiment rises across Eurozone, but outlook remains uncertain

(Sharecast News) - Investor sentiment has improved across the Eurozone in July for the third month in a row, research published on Monday showed.
The Sentix Economic Index for July came in at -18.2, marking a 6.6-point jump on June and a significant increase on April's low of -42.9.

Both the Eurozone and Germany, the bloc's largest economy, are now perceived as being in recovery.

However, while the index for the current situation in the former rose, to -49.5 from -61.5 in June, the expectations index eased after three months of improvement, coming in at 19.5 against 21.8 in June. The overall headline figure of -18.2 also missed consensus, for around -10.4.

Manfred Hübner, managing director at Sentix, said: "Too much optimism seems out of place. On the one hand, expectations are falling slightly in almost all regions. On the other hand, investors continue to assume that the economic slump caused by the corona crisis will not be offset within a year.

"In earlier times, a three-fold increase in the Sentix Economic Index would have been a clear sign of a new upturn. However, this time a more differentiated view must be taken.

"There has been no improvement in the long-term outlook for investors over the past four weeks. The falling expectations are thus a sign there is a danger that the upswing could run out of steam as early as the summer."

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: "The continued improvement in investor sentiment is consistent with a still-resilient equity market, but the details were less upbeat.

"Investors won't make any major decisions based on this headline, but it does hint that the positive momentum in markets, from a very low base in March, is now fading at the margin. Indeed the fact that the Eurostoxx 50 is basically flat on a monthly basis suggests as much.

"The counterpoint in the economy is that further progress, following the inevitable strong rebound as lockdowns were lifted, will be slow."

Sentix surveyed 1,109 investors - 263 of which were institutional - between 2 and 4 July.

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