Euro zone investor morale slumps to lowest level since July 2020

Pedestrians on a walkway in the Mall of Berlin near the Bundesrat federal council building in Berlin, Germany, January 27, 2021. (Photo: CFP)

Investor morale in the euro zone fell to its lowest level in nearly two years in April, a survey showed on Monday, pointing to the beginning of a recession in the second quarter of 2022.

Sentix's index for the euro zone fell to -18.0 in April from -7.0 the previous month, hitting its lowest level since July 2020. A Reuters poll had pointed to a reading of -9.2.

A current conditions index fell to -5.5 from 7.8, its lowest level since April last year, while an expectations index fell to -29.8 from -20.8, its lowest level since December 2011.

While the dip in March's morale had been expected due to the start of the conflict in Ukraine, the strong fall in sentiment in April once again puts investors on the back foot, said Sentix.

The conflict and related sanctions and uncertainties are pushing the euro zone economy towards a recession, it added.

"Investors do not expect that the central bank can rush to the rescue with a more relaxed, more expansive monetary policy because of the still considerable pace of inflation growth."

European Union statistics agency Eurostat said Friday that consumer prices in the eurozone will surge by a new record of 7.5 percent. The surge has been fueled by a 44.7 percent hike in energy prices.

Sentix said morale was dropping globally although nowhere as sharply as in the euro zone.

Sentix surveyed 1,249 investors from March 31 to April 2.