Mild autumn helps boost Eurozone investor morale

Investor sentiment has strengthened in the Eurozone, a closely-watched survey showed on Monday, as the mild autumn raised hopes for a better-than-feared winter.

The latest Sentix economic index came in at -30.9, a notable improvement on October’s -38.3 and above expectations; most analysts had forecast a print closer to -35.0. It was the first increase in three months.

Within that, the current situation and expectations indices both strengthened. The current situation gauge rose to -29.5 from -35.5, while the expectations index jumped to -32.3 from -41.0, the highest reading since June.

In Germany, the Eurozone’s largest economy, the overall index improved to -30.0 from -37.4, largely fuelled by a strong jump in expectations, to -32.0 from -41.3 in October.

Manfred Hubner, managing director at Sentix, said: "The rise in situation and expectation values shows how sensitively investors react in their economic expectations to signals from the energy market.

"October showed higher temperatures than usual, and this means that gas storage facilities in Germany, for example, are full to the brim, more than expected for November. Spot market gas prices collapsed in response; concerns about a catastrophic gas shortage are fading."

Germany has also recently confirmed it will delay shutting down its three remaining nuclear power plants until April, to avoid an energy crunch over the winter.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Investor sentiment rebounded in November but remains well below its level at the start of the year, and it will be a while before we see it back above zero.

"[The expectations index] remains below its level at the height of the Covid crisis, suggesting that investors are still pricing in a deep downturn. What’s more, given how sensitive investor sentiment measures are to developments in the energy markets at the moment, we will take their moves with a pinch of salt."

A total of 1,348 investors were polled between 3 and 5 November, 273 of which were institutional investors.