Eurozone Investor Morale at 10-Year High

Investor sentiment in the eurozone improved more than expected in March, hitting its highest level in almost 10 years on Monday, as concerns that global political risks could end an economic upswing dissipated.

The Frankfurt-based Sentix research group’s eurozone index rose to 20.7 points, reaching its highest level since August 2007. It was above the consensus reading of 18.5 in a Reuters poll of analysts.

“All the expectation components for the global economic regions rose and cast the decline of last month in a new light,” Sentix said in a statement. “Therefore the potential threat of a sudden halt to the economic recovery is off the table.”

The index had last month edged down to 17.4 from 18.2 in January on concerns that US President Donald Trump’s policy course would weigh on the global economy.

A sub-index measuring investor assessment of the current situation in the eurozone also rose to its highest level since May 2011.

An index tracking Germany, the eurozone’s largest economy, rose to 34.1 from 31.3 in February. The indices for the United States and Japan also rose.

“Trump’s motto ‘Make America great again’ is having an effect,” Sentix wrote.

US stocks have risen to record highs since Trump’s election after he vowed to remove some of the regulations introduced after the financial crisis and to boost spending on the military and infrastructure.

“In addition to the main regions, the positive economic momentum for emerging markets is retained,” Sentix said.

An uptick in economic confidence comes as the eurozone economy finally starts to boom, with last week’s PMI surveys showing big expansions in all sectors of the Single Currency area’s economy.

Sentix’s release said: “The economy is in full swing. Fears after last month’s sobering data on investors’ expectations that economy recovery is fading again have dissipated (economic expectations had been severely hit in February on a global scale). The March data shows that already half of last month’s throwback in economic expectations has been recovered. Moreover, investors’ strong conviction on the current situation remains.

“The favorable review of the current situation has been an invaluable foundation of the current economic recovery as even in February investors expressed a solid view on the actual performance of the eurozone economy.”

Sentix polled 1,081 investors March 2-4.