Euro Zone investor confidence beats expectations in August

The Sentix indicator for Euro Zone investor confidence in August came in higher than expected. Figure still comes in second lowest since January 2015 amid post-Brexit uncertainty and growing worries about Italian banks.

Investor confidence records slight recovery from initial post-Brexit slump

Sentix GmbH this morning published its’ indicator of the Eurozone’s investor confidence in August. The figure came in at 4.2%, up 2.5% from last month’s figure and beating estimates by 1%.

The indicator is a composite figure of 36 different indicators capturing aspects of investor confidence in the EMU. It is based on a monthly survey of 1600 financial analysts and institutional investors.

Investor confidence in the EMU seems to be recovering from the past month’s post-Brexit shock, which produced the lowest rating in 17 months.

Investor confidence stays low due to Italian banking worries

However, the rating still represents the second lowest rating since January 2015.

This does not come as a surprise, as economic uncertainty over the long term effects of the UK’s decision to leave the European Union have been joined by renewed worry about the banking sector in Italy.

Italy’s Monte dei Paschi di Siena has made most headlines. Analysts’ speculate that the oldest bank in the world stands at the brink of collapse with billions in non-performing loans.

Germany records growth in industrial production

Some good news to spur positive economic sentiment in the EMU came from the German Federal Statistical Office (Destatis) this morning.

Industrial production in Germany rose by 0.8% in June. This represents an increase of 0.9% from Mays’ negative measure and beat estimates by 0.1%. The figure comparing June’s industrial production to the same month last year came in at 0.5%, also 0.9% higher than results recorded in May.

Euro stays unaffected by higher than expected figures

While positive data on investor confidence in the EMU and industrial production in Germany is usually considered to have bullish effects for the Euro, persistent concern about the economic situation in Europe due to the Brexit vote and Italian banking worries weigh heavily on the Euro, which prevented the EMU currency from recording any major gains against other currencies.

The EUR/USD is trading at 1.10856, the EUR/GBP at 0.84913 at 11.22am.

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