FRANKFURT – The ascent of a leading German indicator of investor confidence ended in March after five consecutive months of improvement as weakness in the banking sector spooked financial market experts.
Germany’s ZEW economic thinktank said its March expectations measure for the coming six months fell to 13.0 points, which was below the market estimate of 15.0 and well off the 28.1 reading in February. After nearly a half year in negative territory, the indicator returned to the black in January.
The current situation reading was also worse than expected, falling to -46.5 points to miss both the market forecast of -44.3 and last month’s result of -45.1.
Major central banks announced coordinated liquidity action at the weekend in the form of daily dollar swaps following two US bank failures and troubles at Swiss lender Credit Suisse that ended in its merger with compatriot bank UBS.
“The international financial markets are under strong pressure,” said Achim Wambach, the head of the institute. “The assessment of the earnings development of banks has deteriorated considerably, although it still remains slightly positive. The estimates for the insurance industry have also declined significantly.”
The ZEW said its Eurozone measures for the present and the next six months also declined in March.
Trouble ahead for Europe's biggest economy?
Investor confidence data on Germany from domestic pollster Sentix released at the beginning of the month showed a sharp drop in expectations. “The probability of a renewed downturn has thus increased significantly,” Sentix said. However, its current situation component climbed again this month to hit its highest mark since June.
Germany’s Dax 40 index of domestic blue chips continued higher after Tuesday’s report as banking shares rebounded, with the overall market up some 1.6% in interday trading.
The yield on the 10-year Bund also rose during the morning session, increasing from below 2.21% before the release to more than 2.22%.
Andreas Bley, chief economist at the National Association of German Cooperative Banks, tweeted: “The ZEW economic expectations cast light and shadow: On the one hand, even after the decline, the expectation of an overall economic recovery from spring onwards still prevails. On the other hand, the survey results make it clear that the current turbulence on the financial markets can certainly dampen the mood.”
- Outlook, view of present both worse than forecast
- Troubled lenders undercut morale
- Expectations for banking, insurance firms wane
By Eric Culp, European Editor
LiveSquawk News
@EricCulpLS
21 March 2023 | 11:00 GMT
FRANKFURT – The ascent of a leading German indicator of investor confidence ended in March after five consecutive months of improvement as weakness in the banking sector spooked financial market experts.
Germany’s ZEW economic thinktank said its March expectations measure for the coming six months fell to 13.0 points, which was below the market estimate of 15.0 and well off the 28.1 reading in February. After nearly a half year in negative territory, the indicator returned to the black in January.
The current situation reading was also worse than expected, falling to -46.5 points to miss both the market forecast of -44.3 and last month’s result of -45.1.
Major central banks announced coordinated liquidity action at the weekend in the form of daily dollar swaps following two US bank failures and troubles at Swiss lender Credit Suisse that ended in its merger with compatriot bank UBS.
“The international financial markets are under strong pressure,” said Achim Wambach, the head of the institute. “The assessment of the earnings development of banks has deteriorated considerably, although it still remains slightly positive. The estimates for the insurance industry have also declined significantly.”
The ZEW said its Eurozone measures for the present and the next six months also declined in March.
Trouble ahead for Europe's biggest economy?
Investor confidence data on Germany from domestic pollster Sentix released at the beginning of the month showed a sharp drop in expectations. “The probability of a renewed downturn has thus increased significantly,” Sentix said. However, its current situation component climbed again this month to hit its highest mark since June.
Germany’s Dax 40 index of domestic blue chips continued higher after Tuesday’s report as banking shares rebounded, with the overall market up some 1.6% in interday trading.
The yield on the 10-year Bund also rose during the morning session, increasing from below 2.21% before the release to more than 2.22%.
Andreas Bley, chief economist at the National Association of German Cooperative Banks, tweeted: “The ZEW economic expectations cast light and shadow: On the one hand, even after the decline, the expectation of an overall economic recovery from spring onwards still prevails. On the other hand, the survey results make it clear that the current turbulence on the financial markets can certainly dampen the mood.”
March’s fall in German investor confidence followed the European Central Bank’s sixth straight rate hike on Thursday.