German investor sentiment deteriorates more than expected
German investor sentiment deteriorated more than expected in February, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.
The headline ZEW expectations index fell to 10.4 from 16.6 the month before, missing expectations for a reading of 15.0.
The current situation index declined to 76.4 from 77.3 in January, undershooting analysts’ forecasts of 77.2.
ZEW President Professor Achim Wambach said: “"The downturn in expectations is likely to be the result of the recently published unfavourable figures for industrial production, retail sales and exports.
“Political uncertainty regarding Brexit, the future US economic policy as well as the considerable number of upcoming elections in Europe further depresses expectations. Nevertheless, the economic environment in Germany has not significantly worsened.”
Pantheon Macroeconomics said: “This fall in investor sentiment is consistent with the modest fall in the Sentix released earlier last month. Across market indicators, inflation expectations fell sharply, which is odd given the surge in the headline CPI rate. We suspect this is because investors are discounting a fall in energy inflation as base effects from last year’s fall in oil prices fade. That said, the decline looks weird.
“We expect a rebound next month. Interest rate expectations in the EZ fell slightly, and investors also pared their expectations for gains in the stock market. Across industries, investors are most upbeat about construction and IT, while sentiment for the auto and utilities sector remains weak.”