Euro zone investor confidence turned positive in August, with the Sentix index climbing to its highest level since February. The gain came from a sharp improvement in current conditions and further stabilization in Germany, but a renewed jump in inflation expectations tempered the picture.
Investor confidence in the euro zone returned to positive territory in August, with the Sentix index climbing to 0.9 points from -3.1 in July. That beat a Reuters poll forecast of -0.5. It also marks a fourth straight monthly increase and the highest level since February.
The current-situation gauge jumped to -8.0 points from -14.8. The expectations index also rose, reaching 10.3 from 9.3 and matching its best level since February.
Sentix linked the improvement to stronger-than-expected growth, recovering industrial production, and the partial fading of the confidence shock tied to the Iran war. High energy costs and a still-subdued order book, however, continue to constrain the recovery.
Germany extends its recovery
Germany's Sentix index rose for a third consecutive month, climbing to -11.9 points from -19.4 and marking its best reading since February. The current-conditions component improved to -28.3 from -39.8, though it stays deeply negative. Expectations also increased, to 6.0 from 3.5.
According to Reuters: "Further economic stabilisation is on the horizon for Germany", Sentix said, pointing to second-quarter growth of 0.2% that helped the economy avoid another recession.
Inflation concerns return
Renewed price pressure tempered the optimism. Sentix's inflation barometer sank to -29.25 from -13.75. Its ECB policy barometer weakened to -15.25 from -8.25, pointing to expectations of a more restrictive policy stance.
That combination of firmer growth and rebuilding inflation risk argues against an early "all-clear" from the ECB, ActionForex noted.
The survey polled 1,097 investors, including 213 institutional participants, between Aug. 6 and Aug. 8.
Sources: ActionForex, Investinglive, Investing.com
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