European Economic Research/ZEW presented a muted business outlook for the coming months, as their economic confidence plunged noticeably to a six-month low in January. The indicator shows the expectations of the market analysts about the economic outlook in Switzerland on a six-month time perspective. The ZEW-CS-Indicator for economic outlook fell 19.6 points to -3.0 in January, which was the bleakest sentiment since July 2015, when it was around -5.4 points.
The muted assessment of market outlook will have a negative impact on already tumbling markets amid falling oil and commodities prices. The results of the assessment started to hit European markets. With the start of today’s trading session, European stocks declined sharply lower amid fresh lows in the oil markets and dim market data. The pan-European STOXX 600 plunged around 3% in early trading, combined with key European benchmarks down over 2%.
European markets are unlikely to make any recovery in the first half of 2016. Sentiments of a fresh recession are increasing after the lifting of sanction on Iran and slow growth from China. In addition to this, the steel industry and other commodities, including iron ore and copper are not showing sign of recovery. The IMF is also pessimistic on Eurozone’s economic outlook. The bank forecasted growth of only 1.7% in 2016 for the Eurozone, which looks quite low compared with other developed markets like The United States.
This means that business activity and economic growth will continue to decline this year for European economies. The arrival of migrants from Syria and other regions are further exacerbating the situation.
By Donald Levit, strategist for www.EconomicCalendar.com
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