Eurozone investor morale fell for the first time in four months in February, a closely-watched survey has shown, as fears rise about the economic impact of the coronavirus outbreak.
Sentix’s Eurozone investor sentiment index fell to 5.2 this month from 7.6 in January. Analysts had predicted a fall to 4.1.
Sentix managing director Manfred Huebner said: “The outbreak of the coronavirus and the subsequent drastic measures taken by the Chinese government… cast a shadow over the economic outlook.”
“Fortunately, so far the effect is limited,” Huebner said. “The strength of the USA is helping the global economy.”
Fears over the coronavirus grew over the weekend as the death toll rose and the number of cases around the world increased.
The virus, which emerged in Wuhan, China in December, has killed more than 900 people and spread to at least 27 countries and territories. It has taken two lives outside mainland China, in Hong Kong and the Philippines.
Beijing responded to the virus by putting the country in lockdown mode, quarantining cities, restricting travel and extending the Lunar New Year holiday.
Investors worry that the hit to the Chinese economy will have a knock-on effect on global growth.
The Sentix survey showed moral deteriorating in Asia and the Eurozone. A sub-index measuring investor expectations fell to 6.5 in February from 9.8 the month before.
Yet the overall index for the US rose for the fourth time in a row to 20.3. The US economy has performed relatively well during the global slowdown, with jobs surging in January.
However, Maddalena Martini, Eurozone economist at consultancy Oxford Economics, warned that “gauging the full economic effects from the Wuhan virus outbreak will require more hard activity data that are likely to show a greater impact than today’s headline Sentix reading”.
Yet she said: “Together with recent weak data from the manufacturing sector, the slide in confidence confirms that the Eurozone’s economic outlook is set to remain subdued in the short-term, and vulnerable to further fallout from the outbreak.”