Eurozone’s investor confidence improved for a fifth month in a row in July to its highest level in nearly three-and-a-half years amid the rebound in economic activity as economies re-open after restrictions linked to the coronavirus pandemic were relaxed.

The eurozone investor confidence index rose to 29.8 from 28.1 in June, survey data from the think tank Sentix showed Monday. Economists had forecast a score of 30.0.

The latest reading was the highest since February 2018.

The survey was conducted from July 1 to July 3 among 1,114 investors.

The current situation index of the survey also rose for a fifth straight month. The reading climbed to 29.8, its highest level since October 2018.

Meanwhile, the expectations index fell to 29.8 from 35.3. The latest score was the weakest since December 2020.

“We are approaching a certain point of “maximum momentum” in the short term,” Sentix said.

“For the economy as a whole, this is not yet a worrying decline,” the institute added.

However, the equity markets, which are very much focused on investor expectations, could see increased volatility due to this development, Sentix said.

The institute pointed out that when similar phases occurred in 2006 and 2010, interim stock market corrections of around 10 percent followed.

Further, Sentix said there is no sign of a turn away from the expansive monetary policy from the ECB.

That said, the institute drew attention to the inflation barometer that remains clearly in negative territory at -38.25, underscoring the danger of further rising inflation rates in a globally increasingly synchronized, strong economic upswing.

The survey also showed that the investor confidence index for Germany also increased for a fifth month in a row to its highest level since February 2018. The situation index rose for a fourteenth straight month, while the expectations measure weakened to an eight-month low.

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