Germany’s Investor Confidence Falls

German investor confidence fell to the lowest in more than 2 1/2 years in September as Europe’s debt crisis and a global slowdown damped the outlook for growth.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to minus 43.3 from minus 37.6 in August. That’s the lowest since December 2008. Economists expected a drop to minus 45, according to the median of 37 estimates in a Bloomberg News survey.

Germany’s benchmark DAX share index has plunged 25 percent since late July as the global outlook worsens and Europe’s debt crisis erodes confidence in its banking sector. The European Commission last week cut its euro-area growth forecasts for the second half and warned the economy may come “close to standstill at year-end.” Standard & Poor’s today lowered Italy’s credit rating, saying weaker growth may mean the nation won’t be able to reduce the region’s second-largest debt load.

“There’s almost only bad news at the moment,” said Carsten Klude, head of investment strategy at M.M. Warburg & Co. in Hamburg. “The sovereign debt crisis and the global economic slowdown both continue to burden sentiment. We don’t expect Germany to slide into recession, but growth will be much weaker in the months ahead.”

ZEW said its gauge of current conditions fell to 43.6, the lowest since July last year, from 53.5. The euro rose slightly after the report to trade at $1.3693 at 11:40 a.m. in Frankfurt.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell