Eurozone Sentix Investor Confidence Plunges On Fears Of Recession

Eurozone investor sentiment declined the most on record in March, reflecting fears of a global recession amid the spread of coronavirus, or COVID19, results of a closely watched survey revealed Monday.

The investor confidence index dropped to -17.1 in March from 5.2 in February, the behavioral research institute Sentix said. The decline of 22.3 points was the sharpest within a month since the survey began. The reading was the lowest since April 2013.

The Sentix said the new coronavirus, which is now spreading significantly across the globe and requires consistent measures to contain it, is plunging the global economy into recession.

The think tank noted that never before have economic data from Sentix collapsed so sharply in all regions of the world within a month.

The current conditions index slid to a four-month low of -14.3 from 4.0 in February.

At the same time, the expectations index plunged to -20.0, the lowest since August 2012, from +6.5 in February. This is a “negative surprise” and means that investors are preparing for a long
period of economic weakness, the think tank said.

The survey was conducted among 1,155 investors between March 5 and 7.

The central bank theme index of the survey jumped to an all-time high of 37.75 points, which means nothing other than that investors are demanding a strong signal from monetary policy, Sentix said.

The ECB is set to hold its policy session on March 12 and ECB President Christine Lagarde, who described herself a policy “owl”, is facing a tough test this time.

The COVID19 crisis is also putting pressure on the fiscal policy to act. “Time is pressing! For if no action is taken,
no one should be surprised by a new “Lehman” moment that would increase the chaos,” Sentix said.

In Germany, the investor confidence index fell sharply to -16.9 in March, which was the lowest reading since October 2019. Both assessment of current situation and expectations among investors weakened to five-month lows.

In the USA, the situation was better due to the previously very robust situation, but here too a downturn is expected. The confidence index slid to 0.2 from 20.3 in February.

According to Sentix, in Asia ex-Japan, especially in China, the recession is obvious. The confidence index came in at -13.5 versus 7.1 in February.

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