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Investor morale strengthens across Eurozone

By Abigail Townsend

Date: Monday 05 Dec 2022

Investor morale strengthens across Eurozone

(Sharecast News) - Investor sentiment across the Eurozone has strengthened by more than expected, a closely-watched survey found on Monday.
The latest Sentix Economic Index was -21.0, a significant improvement on November's reading of -30.9 and above forecasts for around -27.6. It was also the highest reading since June.

Within that, both the current situation index and expectations index strengthened, to -20.0 and -22.0 respectively. The expectations index is now at its highest point since March.

In Germany - Europe's largest economy - the headline index rose to -20.3 from -30.0 in November as the expectations index hit its highest level since March.

Sentix said Eurozone sentiment has benefited from mild weather and growing hopes that the economic downturn would not be as bad as initially feared

Manfred Hubner, Sentix managing director, said: "Investors are spreading hope that thanks to mild winter weather, sufficient gas in storage and a possible peak in inflation data, the economic downturn has passed its zenith."

He added that Eurozone's "surprisingly high" gas levels and stable labour markets were "not consistent with a recession".

But Hubner also cautioned: "In our opinion, this correction should be not misinterpreted as a general trend reversal. The dangers of recession have by no means been averted. For example, energy prices are already rising again and will burden households even more in 2023 than this year."

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Investor sentiment measures have been particularly sensitive to developments in the energy markets recently. Survey work for this release was conducted between 1 and 3 December, which means it is unlikely to have fully captured the oil price agreement late on Friday, but also proceeds the early December cold snap - and it is unclear what Russia and Opec+'s reaction to the start of European Union sanctions will be.

"In other words, take these data with a pinch of salt."

On Friday, EU member states agreed a $60 per barrel price cap on Russian oil, as the bloc sought to curb the Kremlin's income.

Outside of Europe, and the US index rose to -0.5 from -9.4 while in Asia excluding Japan, the index increased for the third time in a row, to -4.8 from -12.5, as China started to ease Covid restrictions.

A total of 1,268 investors were surveyed, 248 of which were institutional investors.

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