Eurozone investor confidence indicator declined in August - Sentix

According to the report from Sentix, the eurozone economy is booming, but the pace is slowing noticeably. The enormous investments of the states, supported by a persistently expansive monetary policy of the European Central Bank, are driving economic activity in the Eurozone and have prevented anything worse from happening, despite the Corona lockdowns. The sentix surveyed investors' assessment of the current situation is rewarding this improvement and, at 30.8 points, has reached its best value since October 2018. However, the sentix overall economic index for the Eurozone is coming to an end and is now suffering a larger discount of 7.6 points. This is due to the significant losses in the expectations component. A decline of 15.8 points in this sub component is de facto more of a halving and thus already represents the third decline in a row. Since its high in May, the 6-month expectations index has already lost 22.8 points.

Economists traditionally recognise a trend reversal in a threefold decline. Accordingly, this decline should not be dismissed as a mere loss of momentum, but should be understood as a warning sign. As the "first mover" among the leading indicators, these developments herald significant declines in other leading indicators. The development is therefore likely to contribute to increased market volatility in the coming weeks. In 2006 and 2010, when we went through similar phases, interim stock market corrections of around 10% followed.