Eurozone Sentix rises to -12.7, but inflation keeps ECB in check

Eurozone investor sentiment showed signs of improvement in February, with the Sentix Investor Confidence Index rising from -17.7 to -12.7, surpassing expectations of -16.4. This also marks the highest reading since July 2024, signaling a tentative shift in market sentiment. Current Situation Index also improved, climbing from -29.5 to -25.5, while Expectations Index made an even more notable leap from -5 to 1, also reaching its highest level since July last year.

Sentix noted that the Eurozone economy is “trying to emerge from the crisis,” with some early signs of stabilization. However, Germany’s economic struggles continue to act as a drag on the broader region, described as a “lead weight” on the bloc’s recovery. Despite this, optimism is growing that a potential shift in German leadership could usher in a more pro-business policy stance, which could help lift economic prospects in the months ahead.

One key takeaway from the report is the diminishing likelihood of aggressive monetary easing from ECB. With investor sentiment improving and the economic outlook brightening, “hopes of more significant support measures from the ECB are also dwindling.”

Inflation outlook remains a lingering concern, preventing ECB from committing to deeper rate cuts. Sentix’s “Inflation” theme index remained at -11 points, signaling persistent price pressures.

Full Eurozone Sentix release here.