Eurozone Business Climate Falls to Over 2-1/2-Year Low

29.04.2019 15:13|Conotoxia Ltd Analyst Team

Economic data from the euro zone have been deteriorating for several months, and any publication of these figures may cause a headache for representatives of the European Central Bank. The ECB has not previously anticipated such a pessimistic economic scenario, hoping that the slowdown will be short-lived.

Today's data was published by the European Commission (European Commission, Directorate General for Economic and Financial Affairs) and referred to both consumers and business. Unfortunately, the data readings are still pessimistic.

The Business Climate Index (BCI) for the euro area fell to 0.42 points in April 2019 and below market expectations at 0.49 and from 0.54 in the previous month. It was the lowest reading since August 2016. The views of the surveyed managers regarding past production, their production expectations and the general assessment of the order portfolios and inventories of finished products dropped significantly, which contributed to the decline of the entire Business Climate Index.

Also data on consumer confidence in the euro zone did not perform well. The consumer confidence index dropped to minus 7.9 points in April 2019 and was 0.7 points lower than in the previous month, due to the more pessimistic expectations of households regarding their future financial situation, and in particular the general economic situation. Meanwhile, the assessment of the financial situation in the past and the intentions of making large purchases remained broadly stable. As a result, the consumer confidence index in the euro area has been at the lowest level since the beginning of the year.

The European stock indices, including the Euro Stoxx 50 index, which includes the 50 largest companies in the euro area, are still not sensitive to deteriorating data from the European economy.

Wykres EU50

Chart: Euro Stoxx 50, D1. Conotoxia trading platform.

EU50 has been moving within a steep upward channel. Its upper and lower limits may be the nearest possible resistance and support areas. At this moment the 76.4 Fibo retracement is a barrier for the bulls at 3518,5 points. It seems that only a break from the above mentioned channel could change the sentiment in this market. Meanwhile, if the trend continue, another resistance may be near 3616 points.

 

Daniel Kostecki, Chief Analyst Conotoxia Ltd.

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

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