German ZEW Investor Confidence Surges To Highest Level Since ‘04
Investors are bullish about Germany's recovery.

- Current conditions reading falters unexpectedly

- ZEW: Poll respondents expect “a general recovery”

 

By Eric Culp, European Editor

LiveSquawk News

@EricCulpLS

 

10.15 GMT

 

Frankfurt, 11 August 2020 (LS NEWS) – German investor confidence jumped to a 16-year high in August as financial market experts expressed further optimism about the outlook for Europe’s largest economy.

 

The ZEW’s forward-looking economic sentiment index ballooned to 71.5, the best result since January 2004, to handily beat the market estimate of 58.0 and the 59.3 reading in July.

 

The current sentiment indicator slipped to -81.3, well short of -68.8 forecast and down from the -80.9 reading last month.

 

Those responding to the German thinktank’s monthly poll seemed to ignore the possible future impact of further coronavirus flare ups and rising political and trade tensions.

 

Christopher Dembik, head of macroeconomic analysis at Saxo Bank, tweeted: “This new jump confirms optimism prevails fueled by economic normalisation, hope of beating Covid and continued stock market gains.”

 

ZEW President Achim Wambach said, “According to the assessments of the individual sectors, experts expect to see a general recovery, especially in the domestic sectors. However, the still very poor earnings expectations for the banking sector and insurers regarding the coming six months give cause for concern.”

 

The ZEW’s indicators for the Eurozone showed a similar pattern to the German results, with a rise in optimism about the next six months and a worsening view of the current environment.

 

Aila Mihr, a senior analyst at Danske Research, tweeted that the spread between the German readings for expectations and current conditions was the “highest ever” in August, which points to a continuing rebound in purchasing managers’ indices.   

 

Divergence from Sentix results

Sentix, another German pollster, said on Monday that investor expectations for Germany fell in August. This is usually a sign that the ZEW headline number is also headed lower.

 

“Granted, there is no iron-clad rule that the two surveys should move in unison, but the key expectations gauges usually do,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

 

“In any case, the fall in the Sentix was trivial, so today’s ZEW headline indicates that investors remain upbeat about the future, even if equities have lost momentum somewhat after the sharp rebound immediately following the swoon in March.”

 

Now that investors have had their say for this month, German managers are due to weigh in when Ifo announces the results of its latest business confidence survey on 25 August.