Eurozone Sentix Investor Confidence Weakens Unexpectedly

(RTTNews) - Eurozone investor sentiment logged an unexpected sharp deterioration in August, signalling a more pronounced economic slump amid uncertainties surrounding upcoming elections in Germany and the USA and the fragile geopolitical situation in the Middle East.

The investor sentiment index fell to a seven-month low of -13.9 in August from -7.3 in July, survey results from the behavioral research institute Sentix showed Monday. The score was expected to rise to -5.5.

"After the severe setback in July, August has now come as a bitter pill for the economy in the eurozone," Sentix said.

Assessment of current situation as well as expectations weakened notably in August. At -19.0, the current situation index reached the lowest since last February and down from -15.8 in July.

The expectations index slid to -8.8 in August from +1.5 a month ago. The reading was the lowest since December 2023.

The think tank noted that investors are concerned about the fragile geopolitical situation, especially in the Middle East. Further, the upcoming elections in Germany and the USA are also coming into focus. Sentix said the economic slump of the "first mover" in the currency bloc should put the European Central Bank under pressure to cut interest rates further and faster. The central bank is likely to focus more on the economic weakness.

The recession bells are ringing once again in Germany, think tank said. The investor sentiment index plunged to -31.1 in August, the weakest since October 2023, from -19.0 in July. Current assessment dropped by a whopping 10.5 points to the lowest since June 2020. The current situation index posted -42.8, down from -32.3 in the prior month.

At the same time, the expectations index weakened to a 10-month low of -18.5 from -4.8 a month ago.