Eurozone Investor Confidence Lowest Since July 2020: Sentix

Eurozone investor confidence collapsed in April, falling to its lowest level since the middle of 2020 to signal the start of a recession as high inflationary pressures and supply concerns due to the Ukraine war clouded the outlook, results of a closely-watched survey showed Monday.

The investor confidence index dropped to -18 from -7 in March, the behavioral research institute Sentix said. Economists had forecast a score of -9.2.

The latest reading was the lowest since July 2020, Sentix said. The index dropped for a second straight month.

The Sentix survey was conducted from March 31 to April 02, among 1,249 investors.

The current situation index of the survey fell to -5.5 from 7.8, to mark the lowest level since April last year.

The expectations measure tumbled to -29.8 from -20.8, logging its weakest reading since December 2011.

“The Eurozone economy is thus being pushed into recession by the Ukraine conflict and the accompanying sanctions and uncertainties,” Sentix Managing Director Manfred Hubner said.

“Due to the still considerable dynamics in the inflation trend, investors do not expect the central bank to be able to come to the rescue with a looser, even more expansive monetary policy,” Hubner added.

The investor sentiment index for Germany also dropped sharply in April to 0-17.1, the lowest level since June 2020. The situation index for the biggest euro area economy shed 14.8 points to -4.8 and the expectations measure plunged to -28.8, logging the worst value since January 2009.

This data does not yet take into account the fact that there will actually be a disruption in energy supplies, Sentix said. Germany has a lot of dependence on Russian gas and there are concerns supplies would be halted due to price disputes.

Inflationary pressures and logistics difficulties are eroding sentiment among businesses and households.

Meanwhile, the US is “only” in a cyclical downturn, which is, however, increasingly gaining negative momentum, the Sentix survey showed.

Expectations for the US economy decreased for the fourth month in a row, but the current situation, though declining, remained positive.

The survey showed stagnation in the Asian region including China and the prospect of a deep recession in Eastern Europe.

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