Novinite.com
10 Mar 2025

Investor sentiment in the eurozone saw a significant improvement in March, driven by Germany's plans to loosen fiscal constraints and take on substantial new debt. A survey conducted by market research firm Sentix between March 6 and 8 among 1,097 investors revealed that the eurozone's investor sentiment index rose sharply to -2.9 points from -12.7 in February. This exceeded expectations of -8.4 points and marked the highest level since June 2024.

While overall sentiment improved, the index measuring the current economic situation in the eurozone saw a more modest rise, reaching -21.8 points from -25.5 in February. However, optimism about the future surged, with the Sentix index for investor expectations climbing to +18.0 points from +1 point a month earlier, reaching its highest level since July 2021.

The survey attributed the rising confidence to Europe's and Germany's planned debt-financed investments, particularly in defense and infrastructure. Within Germany, investor expectations soared, with the relevant index jumping by 26.3 points to +20.5?the highest level in nearly three years. The assessment of current economic conditions also showed improvement, rising to -40.5 from -50.8 points. Overall, Germany's investor sentiment index climbed to -12.5 from -29.7, reaching its best level since April 2023.

Meanwhile, the Sentix survey for the United States painted a starkly different picture, showing a historic decline in investor confidence. The US investor sentiment index plummeted in March to -2.7 points from +21.2 in February. This marked the lowest reading since July 2023 and the steepest single-month drop since the global financial crisis of 2008.

Uncertainty surrounding US economic policy, particularly President Donald Trump's trade tariffs on imports from Canada, Mexico, and China, as well as growing tensions with Europe, has contributed to investor unease. Economic expectations in the US dropped by 25.8 points to -17.8, the lowest level since November 2022. The index measuring the current situation also saw a sharp decline, falling to 13.5 points from 35.3 in February.

The last time such a dramatic collapse in sentiment occurred was during the initial wave of the COVID-19 pandemic in early 2020. At that time, the US economy was supported by significant Federal Reserve interventions, including interest rate cuts and large-scale bond purchases. However, no similar measures appear to be on the horizon, leaving investors grappling with uncertainty.