German investor sentiment improves amid Covid vaccine hopes
German investor sentiment improved in December amid optimism over a Covid-19 vaccine, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.
The headline ZEW investor expectations index rose to 55.0 from 39.0 in November, coming in ahead of consensus expectations for a reading of 46.0.
The current situation gauge printed at -66.5 in December from -64.3 the month before, versus expectations of -66.0.
ZEW President Professor Achim Wambach said: "The announcement of imminent vaccine approvals makes financial market experts more confident about the future.
"The ZEW indicator of economic sentiment increased significantly in December despite the still high numbers of new coronavirus infections. This is most likely due to the announced forthcoming Covid-19 vaccine approvals."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the ZEW suggests that investors were in a "great mood" at the start of December, consistent with Monday’s Sentix report, not to mention the briskest monthly gain in equities since April 2009 in November.
"This upturn, ostensibly driven by markets cheering the uplifting vaccine news, looks great, but near-term risks still remain, both in terms of the imminent slowdown in the economy as well as the potential for adverse news on the vaccine, related to safety, uptake and distribution.
"The details show that investors’ inflation expectations rose significantly this month, though the outlook for short-term interest rates were virtually unchanged, indicating that markets are looking for a decline in real interest rates, probably exactly what policymakers would like to see. Finally, expectations for equities went up across the board, consistent with the overall solid headline."