Eurozone Investor Confidence Improves Unexpectedly

(RTTNews) - Eurozone investor sentiment improved unexpectedly in May, driven by investor expectations that the conflict with Iran would not escalate further, a survey conducted by the behavioral research institute Sentix showed Monday.

The investor sentiment index rose to -16.4 in May from -19.2 in April. The score was forecast to fall to -20.9.

Assessment of current situation and economic expectations improved in May but both remained in negative territory, signalling that the risk of recession remains acute. The current situation index rose to -21.5 from -22.8 in April. At the same time, the expectations index improved notably to -11.3 from -15.5 in the prior month.

Inflation expectations remained negative across the eurozone. Although lower interest rates could benefit economies, particularly Germany, the European Central Bank would need to address the foreseeable failure to meet its inflation target by raising rates, Sentix said. Investors expect a moderately restrictive response from the ECB.

The fiscal barometer of the survey also signaled significant pressure for interest rate rises due to expansionary fiscal policy. German economic sentiment deteriorated to its lowest level since January 2025 as the region faces a government crisis coupled with economic problems. The investor sentiment index posted -30.9 in May compared to -27.7 in April.

The current situation index declined to -42.3 compared to -38.0 in the prior month. The expectations index fell to -18.8 from -16.8.