Eurozone investor confidence improved at the start of the year, with Sentix Investor Confidence Index rising from -6.2 to -1.8 in January, well above expectations of -5.1 and the strongest reading since July. The rebound was broad-based, with the Current Situation Index climbing from -16.5 to -13.0 and the Expectations Index jumping from 4.8 to 10.0, both also six-month highs.
Sentix noted that the improvement reflects a narrowing gap between professional and private investors. While institutional investors had already turned more optimistic in recent months, private investors had remained sceptical. That dynamic is now shifting, with private investors beginning to join the recovery narrative, even though differences in outlook between the two groups remain historically large.
Inflation concerns are also easing at the margin. Sentix’s Inflation Barometer shows expectations for slightly softer price pressures, helping to reduce stress on bond markets. However, Sentix cautioned against assuming renewed central bank support, warning that as the recovery takes hold, ECB policymakers are “unlikely to feel much incentive to act”.
