Eurozone Sentix Investor Confidence Index’s latest update offers a mixed but cautiously optimistic view of the region’s economic outlook. In December, the index rose from -18.6 to -16.8, slightly below the expected -16 but marking its highest level since May. Current Situation Index improved from -26.8 to -23.5. More notably, the Expectations Index inched higher from -10.0 to -9.8, reaching its peak since February.
The consecutive rise in the Expectations Index for the third month is a signal that some economists might interpret as the beginning of a trend reversal. However, Sentix cautions against over-optimism, noting “The still weak overall momentum and the lack of a certain amount of international support speak against this.”
Despite these reservations, Sentix identifies potential for significant improvement at the start of the new year, largely due to positive shifts in the inflation outlook. The Sentix inflation barometer, which tracks expectations about inflation, has shown improvement for the fifth consecutive time, reaching 16.25.
Sentix elaborated on this, stating, “From this positive view of inflation, investors not only deduce an end to the central banks’ prolonged cycle of interest rate hikes, but now also expect positive support from monetary policy.” The corresponding theme barometer, reflecting this optimism, has ascended to 14.25, the highest since April 2021.
