Eurozone Sentix Investor Confidence Improved: Is It a Sign of Change?



Eurozone Sentix investor confidence

Investor confidence in the European Union (FEZ) (VGK) has improved in January 2017. The Sentix Investor Confidence Index stood at 18.2 in January 2017, compared to 10.0 in December. This level beat the market’s expectation of 12.5. The index is one of the leading economic indicators.

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Sentix Investor Confidence Index

The Sentix Investor Confidence Index is based on the results of surveys of ~2,800 analysts and investors and shows investor sentiment toward business conditions. A strong performance in the index is a good sign for the Eurozone (EZU) (HEDJ) (IEV) economy.

The stronger growth in January’s investor confidence report signals that investor confidence improved at a higher rate. However, the Eurozone’s Manufacturing and Services PMIs are showing gradual improvement, which shows that the overall business climate is positive.

The Eurozone’s economy has faced various challenges in recent years. Low economic growth and deflation have been its major concerns. But now, Britain’s (EWU) pending exit from the European Union is a major concern. In July, the index touched a record low of 1.7 after the result of the Brexit referendum was announced in June. Policymakers are now thinking that the proposed exit from the European Union (FEZ) (IEV) will be a “hard Brexit.”

As we discussed in the previous part, billionaire investor Marc Lasry believes that European (IEV) (VGK) (EZU) fundamentals and economic growth still need to improve. That provides opportunities to invest in the economy. In our view, investors should be selective about their investments in Europe.

In the next part of this series, we’ll analyze the performance of US crude oil inventories for the week ended January 6, 2017.


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