Eurozone Investor Sentiment Weakens Unexpectedly

(RTTNews) - Euro area investor confidence deteriorated unexpectedly in August as the newly reached trade deal with the U.S. deepened concerns about the current economic situation as well as the outlook, data from the behavioral research institute Sentix showed on Monday.

The Sentix investor sentiment index fell steeply to -3.7 in August from 4.5 in July. The measure was expected to climb to 6.2.

The current situation indicator declined sharply to -13.0 from -7.3. Likewise, the expectations index plunged to 6.0 from 17.0 in the previous month.

The Sentix survey was the first to assess the U.S.-EU trade agreement and the deal is proving to be a real mood killer, the think tank said.

The think tank said, "The U.S. and Donald Trump may feel like winners in the short term, but falling expectations here too indicate that this type of trade policy will mainly produce losers."

Although it looked as if the euro area was emerging from its economic lethargy recently, but this has become a question again as pressure on export-oriented industries is likely to increase further, Sentix said.

In addition, concerns about spiraling government debt are growing in the currency bloc.

In Germany, economic sentiment deteriorated notably in August with the index falling to -12.8 from -0.4 in July.

The current situation index slid to -29.0 from -18.8 in July. Similarly, the expectations index declined to 5.0 from 19.8 in the prior month.

Sentix said the trade agreement with the US will require a rethink in Berlin. Moreover, the federal budget is out of control and any generous social welfare system leads to free-rider effects. If the "correction" is made through tax hikes rather than austerity, there is little hope for an upturn, said Sentix. The survey was carried out by 1,050 investors between July 31 and August 2.