Eurozone Sentix Economic Sentiment dropped from 29.8 to 22.2 in August, below expectation of 29.0. Current Situation index rose from 29.8 to 30.8, highest since October 2018. However, Expectations index dropped sharply from 29.5 to 15.0, lowest since May 2020 and the third decline in a row.
Sentix said: “Economists traditionally recognise a trend reversal in a threefold decline. Accordingly, this decline should not be dis-missed as a mere loss of momentum, but should be understood as a warning sign. As the “first mover” among the leading indicators, these developments herald significant declines in other leading indicators. The development is therefore likely to contribute to increased market volatility in the coming weeks. In 2006 and 2010, when we went through similar phases, interim stock market corrections of around 10% followed.”
