Eurozone: Sentiment completely decoupled? – Commerzbank

By FXStreet FXStreet (Delhi) – Research Team at Commerzbank, suggests that based on ‘hard’ data, the euro-zone economy only grew by 0.25% quarter-on-quarter in the last three months of 2015.

Key Quotes

“Nevertheless, business sentiment has continued improving until recently. However, the problems in China, which are becoming increasingly visible, should soon spoil the party. Sentiment on financial markets has already turned at the start of the year. In our view, the uptrend in the euro-zone purchasing managers’ indices (PMIs) is unlikely to have continued in January. In the USA, underlying inflation pressure is on the rise.

In the euro zone, the uptrend in industrial production came to a halt in the spring of 2015. Yet this does not appear to weigh on sentiment in the manufacturing sector. On the contrary, the manufacturing PMI in December climbed to its highest level since April 2014. This positive sentiment is likely above all to reflect hopes of a better performance this year.

However, the economic outlook has been hit considerably at the start of the year. The problems in China are increasingly being felt, threatening to pull global growth in 2016 lower as well. Financial investors have reacted already, with global equity prices nose-diving as a …read more

Source:: FX Street