Eurozone investor sentiment plummeted going into August, hitting its lowest level since September 2009 amid concerns global policymakers lack the tools to respond effectively to a deepening economic crisis, a survey showed. Market research group Sentix said on Monday its headline index fell at its fastest pace on record to -13.5 in August from 5.3 in July, missing even the lowest forecast in a Reuters survey of economists for a drop to -1.0 by a long way.
Economists had on average forecast a fall to 1.9. "The mix of EU debt problems, the powerlessness of policymakers regarding this and the quarrels in the US regarding lifting the deficit ceiling have strongly unsettled investors," Sentix said in a statement.
The group said this mix of problems, as well as an historic downgrade of the US credit rating and turbulence on the financial markets, were reinforcing the impression that the outlook for the global economy was darkening. A sub-index of current conditions fell to 3.50 from 19.25, while expectations dropped to -29.00 from -7.75.
"Ever more investors see a spillover of the financial markets' problems into the real economy as a probable scenario," Sentix said. Twin debt crises in Europe and the United States are stoking fears of the rich world sliding back into recession, and finance chiefs from the world's industrial powers pledged on Sunday to take whatever actions were needed to steady markets in an attempt to calm frazzled investors' nerves.