August Alarm: Euro Zone Investor Sentiment Suffers Sharp Decline

Investor sentiment in the euro zone declined for the second consecutive month in August, according to a survey released on Monday, hitting its lowest level since January.

The Sentix index for the euro zone dropped to -13.9 points in August from -7.3 in July. Analysts surveyed by Reuters had anticipated a decrease to -8.0 this month.

The expectations index also saw a significant decline, falling to -8.8 points from 1.5 in July. Sentix noted that this sharp drop is “likely to worry forecasters,” as the already weak economic situation is expected to worsen further over the next six months.

The survey highlighted that investors were concerned about the fragile geopolitical landscape, particularly in the Middle East, upcoming state elections in Germany, and uncertainty surrounding the U.S. presidential election later this year.

Investor sentiment in Germany, Europe’s largest economy, plummeted to -31.1 in August from -19.0 the previous month. The index measuring the current situation in Germany dropped to -42.8 in August from -32.3 in July.

Sentix conducted the poll of 1,150 investors between August 1-3.