Figures from the Sentix showed that the eurozone investor sentiment rose sharply in July, exceeding economists' forecasts and reaching its highest level since February 2022. This means that the fears of recession expressed in April as a result of the US tariff shock are completely off the table. The July data from the Sentix also indicate a sustained upturn in the European economic region.
The investor confidence index rose to +4.5 points from +0.2 points in June. Economists had expected an increase to +1.1 points. The economic expectations index jumped to 17.0 points from 14.3 points in June. Meanwhile, the current situation index rose to -7.3 points (the highest value since May 2023) from -13.0 points in June.
Sentix said that the upswing scenario narrows the ECB's future room for manoeuvre for further interest rate cuts. This is shown by the Sentix central bank policy barometer, which is compiled at the same time as the economic data. "The central bank's interest rate policy is likely to remain in the comfort zone for the time being. Despite the economic upturn, the Sentix inflation barometer does not indicate any significant negative impact. The ECB is therefore likely to keep its feet still for the time being when it comes to interest rate policy", Sentix added.
Meanwhile, the investor confidence index in Germany rose to -0.4 points (the highest value since February 2022) from -5.9 points in June. The economic expectations index improved to 19.8 points from 17.5 points in June, while the current situation index increased to -18.8 points (the highest value since May 2023) from -26.8 points in June.