German investor sentiment hits best level since 2000 - ZEW

German investor sentiment improved significantly in May as the third wave of coronavirus eased, hitting its best level in more than 20 years, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.

The headline ZEW investor expectations index rose to 84.4 from 70.7 the month before, coming in ahead of expectations for a reading of 72.0. This marked the best level since the start of the Covid-19 pandemic and the highest level since February 2000.

The current situation index printed at -40.1 in May compared to -48.8 in April.

ZEW President Professor Achim Wambach said: "The slowing down of the third Covid-19 wave has made financial market experts even more optimistic.

"The ZEW indicator of economic sentiment in the May survey has reached its highest level in more than 20 years. The assessment of the economic situation has also improved noticeably. The experts expect a significant economic upswing in the coming six months. The economic outlook for the euro area and the United States has improved considerably as well."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "This is a solid headline, consistent with yesterday’s further climb in the Sentix. The leap in expectations suggests that markets now believe in the best of possible worlds; namely that the a strong, if short-lived, economic recovery is about to begin, driven by an impressive Q2 vaccine push, and that policymakers won’t let the foot off the gas as the above-average economic data roll in over the summer and in Q4.

"We have little doubt that economic activity will soon take a significant step up, as restrictions in key services and non-essential retail are lifted, and people start moving around again. By contrast, we are less certain that the ECB and markets aren’t headed for a stand-off, which tends to be resolved with an increase in volatility."