Eurozone Investor Confidence Still Weak: What’s the Impact?



Eurozone investor confidence so far in May

The Eurozone’s (FEZ) (VGK) investor confidence has shown some weakness so far in May. The Sentix Investor Confidence Index was 19.2 compared to 19.6 in April, missing the market estimate of 21.2.

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Sentix Investor Confidence Index

The Sentix Investor Confidence Index shows investors’ response to business conditions. Since the start of 2018, major Eurozone economic indicators have been falling gradually. The Sentix Investor Confidence Index has also been falling gradually.

Weakness in this index has been continuing, mainly due to various domestic factors such as bad weather conditions in most of the Eurozone and some political instability in Germany, the powerhouse of the Eurozone. The ECB (European Central Bank) is maintaining its dovish stance, which is signaling that the economy still needs support from the ECB to accelerate growth.

The iShares Europe ETF (IEV), which tracks the performance of the Eurozone (VGK), rose 1.3% so far in May, as of May 14. However, it rose 2% in April. Improvements in major Eurozone indexes were mainly due to some recovery after a huge fall in performance in February and March. The rising trade war tensions between the United States and China also affected the Eurozone’s economy in the past few months.

In the next part of this series, we’ll analyze the indicators that investors should watch this week.


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