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Eurozone Investor Confidence Erodes Sharply As Trade Disputes Hurt

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Eurozone investor confidence eroded sharply in June as a renewed escalation in trade tensions between the US and China hurt sentiment in the single currency bloc, survey data from the behavioral research institute Sentix showed on Tuesday.

The investor confidence index for the euro area fell by 8 points to -3.3 from +5.3 in May. Economists had expected a score of +2.5.

The current situation measure of the survey dropped to 6 from 11 and the expectations index plunged 12 points to -12.3, the lowest level since February.

"The hope that the phase of economic weakness around the turn of the year 2018 / 2019 could be quickly brought to an end seems to have vanished," Sentix said. "The Euroland economy is once again on the threshold of recession."

The survey also found that investors are now expecting stimulus from the central banks, especially the US Federal Reserve. The corresponding theme index of the survey climbed 11 points to 22.25, its highest level since July 2016.

Investor confidence in Germany also fell sharply in June to reach negative territory for the first time since March 2020. Sentiment in the export-oriented economy is being damped mainly by the escalating Sino-US trade war and somewhat by the concerns relating to climate change.

"This makes a recession very likely," the think tank said.

The investor confidence index for the US shed 10 points to its lowest level since February 2016.

Meanwhile, Austria registered a massive fall in economic expectations, thanks to political factors.

Among the surveyed countries, investor confidence improved only in Switzerland.

The latest Sentix survey was carried out among 906 investors, of which 247 were institutions, between June 6 and 8.

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