German investor sentiment improves on lower inflation hopes

BERLIN, Nov 14 (Reuters) – German investor sentiment improved more than expected in November on hopes of an imminent decline in inflation, even as Germany’s economic outlook remains bleak overall.

The ZEW economic research institute said on Tuesday that its economic confidence index rose for the second consecutive month in November, to -36.7 from -59.2 the previous month. A Reuters poll had indicated a November reading of -50.0.

A negative ZEW reading indicates that more analysts have a pessimistic view of sentiment in the next six months than an optimistic view.

“It is probably related above all to the hope that inflation rates will fall soon,” ZEW chairman Achim Wambach said. “In this case, policymakers would not have to rein in monetary policy as hard and/or for as long as feared.

“However, the economic outlook for the German economy is still clearly negative,” he added.

The European Central Bank raised rates at its fastest pace on record, raising them by a combined 200 basis points to 1.5% in just three months, to tame record eurozone inflation. Despite the rapid pace, markets still expect the bank to raise rates further.

The head of the French central bank said on Tuesday that signs of a spike in headline and core inflation in the United States were “good news” for everyone, given that the world’s largest economy had been on the rise. forefront of the global inflation cycle.

The Current Conditions Index also saw a stronger-than-expected increase in November, rising to -64.5 from -72.2 the previous month. Analysts polled by Reuters had expected a reading of -68.4.

Analysts said a number of factors, including an expected cap in energy prices and full gas storage levels, contributed to the improving mood in November. They stressed, however, that this did not indicate a turnaround was afoot.

Rising expectations show that investors seem to have become accustomed to the global crisis environment, “but pessimism continues to reign”, said Alexander Krueger of private bank Hauck Aufhaeuser Lampe. “With no solution to the energy crisis in sight, uncertainty will remain high for the time being.” (Reporting by Rene Wagner, Reinhard Becker, Miranda Murray, editing by Rachel More and Tomasz Janowski)

James R. Rhodes