FRANKFURT – Shifting political landscapes at home and abroad have darkened the mood of German financial market experts, sparking a surprise decline in a major indicator for the sector.
The ZEW economic thinktank said Tuesday that its November expectations indicator for the coming half-year fell to 7.4 points, its second-worst result since November 2023 after the 3.6 reading in September. Analyst had predicted a minimal increase to 13.2 from 13.1 in October.
The current conditions measure eased to -91.4 points, its lowest since May 2020, to fall short of the -85.0 estimate and the -86.9 result from last month.
The expectations index for the Eurozone dropped to 12.5 points from 20.1 in October.
“Economic expectations for Germany have been overshadowed by Trump’s victory and the collapse of the German government coalition,” ZEW President Achim Wambach said. “In the current survey, economic sentiment has declined – and the outcome of the US presidential election is likely to be the main reason for this.”
Donald Trump’s Republican Party was poised for a trifecta after winning the presidency and the Senate, with ballot counting for the House of Representatives pointing to a third and thus complete victory at the federal level.
In Germany, Chancellor Olaf Scholz last week sacked his finance minister to effectively end the country’s tripartite coalition government. Media reports Tuesday said snap elections could be held as early as February.
Wambach noted that the economic outlook for the US is “clearly rising”, with the opposite the case for China and the Eurozone. Despite this, “More optimistic voices were heard in the last survey days, expecting economic prospects for Germany to improve with snap elections on the horizon. Overall, what we’re currently observing is a very dynamic development of economic expectations.”
EUR/USD remained continued lower and neared 1.061 following the report. The Dax 40 index of German blue chips was off more than 0.8%.
Jumping to conclusions?
“We think today's reading is likely to be a temporary setback following a turbulent week, as businesses assess their exposure to recent geopolitical events,” wrote Alexander Valentin from Oxford Economics. “After all, potential US tariffs on Eurozone products are still subject to political debate and are unlikely to impact industry in the near term. We think that recent events strengthen the case for ECB rate cuts next year, providing a tailwind for Eurozone industry.”
This was the first ZEW survey following last month’s 25-basis point rate cut by the European Central Bank, its second reduction of Eurozone borrowing costs in the span of five weeks.
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postMessage({action: 'PublisherChannelJoined' });
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socket.close(1000);
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postMessage(data);
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session_info.browser_name = data.browser_name;
session_info.user_agent = data.user_agent;
session_info.browser_version = data.browser_version;
session_info.cookies_enabled = data.cookies_enabled;
session_info.platform = data.platform;
session_info.player_version = data.player_version;
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session_info.connection_protocol = data.protocol;
session_info.delay_target = data.delay_target;
session_info.session_email = data.session_email;
session_info.remote_ip = data.remote_ip;
session_info.php_session_id = data.php_session_id;
session_info.application_name = data.application_name;
session_info.http_referrer = data.http_referrer;
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function start_log() {
var session_start_date = new Date();
session_start_time = session_start_date.getTime();
var months = ['Jan','Feb','Mar','Apr','May','Jun','Jul','Aug','Sep','Oct','Nov','Dec'];
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data_array.username = session_info.session_email;
data_array.php_session_id = session_info.php_session_id;
data_array.webrtc_protocol = '';
data_array.session_start_time = (session_start_time/1000).toFixed(0);
data_array.stream_name = session_info.stream;
data_array.session_start_date = session_start_date_string;
var msg_string = JSON.stringify(data_array);
if (socket.readyState == 1) { socket.send(msg_string); }
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function update_session_info(data) {
var data_array = {};
var msg_string = '';
var current_date = new Date();
var current_time = current_date.getTime();
session_info.protocol = data.protocol;
session_info.curr_delay = (data.effective_latency / 1000).toFixed(2);
session_info.session_length = current_time - session_start_time;
session_info.ping_time = data.ping_time;
session_info.jitter = data.jitter;
session_info.packet_loss = data.packet_loss;
session_info.effective_latency = data.effective_latency;
session_info.mean_opinion_score = data.mean_opinion_score;
session_info.restarts = data.restarts;
if (socket_emits == 0) {
data_array = {};
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data_array.delay_target = 0;
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data_array.flash_version = '';
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data_array.user_email = session_info.session_email;
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data_array.jitter = session_info.jitter;
data_array.packet_loss = session_info.packet_loss;
data_array.effective_latency = session_info.effective_latency;
data_array.mean_opinion_score = session_info.mean_opinion_score;
data_array.session_id = session_info.session_id;
msg_string = JSON.stringify(data_array);
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data_array.type = 'webrtc_log_data';
data_array.session_id = session_info.session_id;
data_array.php_session_id = session_info.php_session_id;
data_array.connection_protocol = session_info.protocol;
data_array.restarts = session_info.restarts;
data_array.threshold = 0;
data_array.curr_delay = session_info.curr_delay;
data_array.session_length = session_info.session_length;
data_array.date = current_time;
data_array.webrtc_protocol = session_info.protocol;
data_array.ping_time = session_info.ping_time;
data_array.jitter = session_info.jitter;
data_array.packet_loss = session_info.packet_loss;
data_array.effective_latency = session_info.effective_latency;
data_array.mean_opinion_score = session_info.mean_opinion_score;
data_array.stream = session_info.stream;
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socket_emits++;
if (socket_emits == 100) { socket_emits = 0; }
}
- Outlook and view of present worsen
- Shake-ups in Berlin, Washington dash hopes
- Pollster blames Trump victory for declining morale
By Eric Culp, European Editor
LiveSquawk News
@EricCulpLS
12 November 2024 | 10:55 GMT
FRANKFURT – Shifting political landscapes at home and abroad have darkened the mood of German financial market experts, sparking a surprise decline in a major indicator for the sector.
The ZEW economic thinktank said Tuesday that its November expectations indicator for the coming half-year fell to 7.4 points, its second-worst result since November 2023 after the 3.6 reading in September. Analyst had predicted a minimal increase to 13.2 from 13.1 in October.
The current conditions measure eased to -91.4 points, its lowest since May 2020, to fall short of the -85.0 estimate and the -86.9 result from last month.
The expectations index for the Eurozone dropped to 12.5 points from 20.1 in October.
“Economic expectations for Germany have been overshadowed by Trump’s victory and the collapse of the German government coalition,” ZEW President Achim Wambach said. “In the current survey, economic sentiment has declined – and the outcome of the US presidential election is likely to be the main reason for this.”
Donald Trump’s Republican Party was poised for a trifecta after winning the presidency and the Senate, with ballot counting for the House of Representatives pointing to a third and thus complete victory at the federal level.
In Germany, Chancellor Olaf Scholz last week sacked his finance minister to effectively end the country’s tripartite coalition government. Media reports Tuesday said snap elections could be held as early as February.
Wambach noted that the economic outlook for the US is “clearly rising”, with the opposite the case for China and the Eurozone. Despite this, “More optimistic voices were heard in the last survey days, expecting economic prospects for Germany to improve with snap elections on the horizon. Overall, what we’re currently observing is a very dynamic development of economic expectations.”
EUR/USD remained continued lower and neared 1.061 following the report. The Dax 40 index of German blue chips was off more than 0.8%.
Jumping to conclusions?
“We think today's reading is likely to be a temporary setback following a turbulent week, as businesses assess their exposure to recent geopolitical events,” wrote Alexander Valentin from Oxford Economics. “After all, potential US tariffs on Eurozone products are still subject to political debate and are unlikely to impact industry in the near term. We think that recent events strengthen the case for ECB rate cuts next year, providing a tailwind for Eurozone industry.”
This was the first ZEW survey following last month’s 25-basis point rate cut by the European Central Bank, its second reduction of Eurozone borrowing costs in the span of five weeks.
Sign up for LiveSquawk and receive a discount with the code LSQEC$