Eurozone investor sentiment deteriorated sharply in April, with data signaling that the risk of another recession is coming back into focus just as inflation concerns surge again on elevated oil prices. Sentix Investor Confidence dropped from -3.1 to -19.2, well below expectations of -7.5, and marking the weakest reading since April 2025.
The breakdown in sentiment was broad-based. The Current Situation Index plunged from -9.5 to -22.8, while the Expectations Index fell from 3.5 to -15.5, highlighting a rapid shift in outlook. According to Sentix, the slump has accelerated in just four weeks as the impact of the Iran war feeds through financial markets and economic expectations.
At the core of the downturn is the sustained surge in energy prices. Crude oil holding above USD 110, combined with supply bottlenecks in the Strait of Hormuz, is weighing heavily on sentiment. Disruptions to shipping and attacks on energy infrastructure have amplified uncertainty, reinforcing concerns that growth will be constrained further.
Inflation risks are also accelerating. Sentix’s inflation barometer showed another sharp rise in price concerns, driven by energy market disruptions and higher oil prices. The combination of weakening growth and rising inflation is reinforcing stagflation fears, with investors increasingly concerned that the Eurozone could face both a downturn and persistent price pressures in the months ahead.
