EUROZONE EU 1200X627

Euro zone investor morale fall deepens in October

Oct 9 • Morning Roll Call • 35 Views • No Comments

On Monday Sentix investor confidence had shown a further decline in investor morale, mostly due to the concerns regarding Italy’s fiscal policies and the tighter inquiry regarding car industry compliance with the emission rules. The Sentix index fell to 11.4 from 12 points in the previous month. The managing director of Sentix, Manfred Heubner said that the fall in index was caused by the discussion about the auto sector in Germany where the German carmakers and the government have dismissed the compromise to cut pollution from diesel vehicles. The request from the government was to offer diesel car owners an trade-in incentive and hardware fixes, however not all carmakers were happy to accept the deal as the hardware fixes could lead to a cost amounting to several billions of euros and would greatly affect the profit margins.

Another index assessing the investor morale, according to Reuters, is the concerns about the stability of Chancellor Angela Merkel’s government that was shaken by the disputes over immigration and the scandal hit chief of the domestic spy agency.

Furthermore, investors have seen a decline in German industrial output on Monday, which unexpectedly dropped to negative 0.3% in August, as opposed to the expected positive 0.4% reading. These numbers in combination with the recent decline in retail sales are seen as an indication that the Europe’s biggest economy had failed to sustain a strong start of the year.

Not so good news came from the UK as well, where it is evident that Brexit related uncertainty has started to affect the business. Businesses are suffering from lower exports, as well as recruitment difficulties and the scale down of investment plans. According to the British Chambers of Commerce, in a survey conducted with 5,600 companies, a problem has been identified in finding employees and are facing most trouble since 1989 when the survey began. In addition, the factory exports growth has recorded the biggest slowdown in the past two years. The slowdown in export is caused by a weaker sterling, which is not benefiting the exporters, while consumer spending is not as high as expected so as to support the domestic market.

ECONOMIC CALENDAR EVENTS FOR OCTOBER 9th

AUD NAB Business Confidence
EUR German Trade Balance
GBP FPC Statement
GBP MPC Member Broadbent Speaks
CAD Gov Council Member Wilkins Speaks

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