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German Investor Confidence Falls On Cautious Growth Outlook 10 days ago
(RTTNews) - Economic sentiment in Germany fell more than expected in November as investors and analysts remained cautious about the outlook for growth in the medium term, while the view on the current situation exceeded expectations, results of a closely watched survey showed Tuesday.
The economic sentiment index fell to 51.1 in November from 56 recorded in October, the Mannheim-based Centre for European Economic Research or ZEW said. That was the second consecutive fall. Economists had forecast a decline in the index to 55. The economic expectations for Germany are still on a high level, the ZEW said.
"The upward trend of the economic expectations is interrupted for the time being," ZEW President Wolfgang Franz said. "The surveyed financial market experts signal that they do not count on a strong boost for economic growth in the next year. It rather seems that economic recovery will proceed in small steps."
The German economy exited recession in the second quarter by expanding 0.3% sequentially, ending a series of contractions that started in the second quarter of 2008. The European Commission said in its Autumn forecast that the biggest Eurozone economy is likely to contract 5% this year and is expected to expand by 1.2% next year and by 1.7% in 2011. The government led by Chancellor Angela Merkel raised its economic outlook to show a 5% contraction this year and an expansion of about 1.2% in 2010. The Federal Statistical Office is due to publish preliminary GDP figures for the third quarter on November 13.
"Earlier enthusiasm is now gradually giving way to realism," ING economist Carsten Brzeski said. "The outlook looks still good, even though the German economy is about to enter calmer waters."
The current situation index of the survey improved to minus 65.6 from October's minus 72.2, while the expected reading was minus 70. The index improved for a sixth straight month.
Commerzbank analyst Simon Junker is of the view that the decline in equity prices in the period surveyed most probably influenced analysts' views. "After a strong second half year, economic growth is set to return to more normal levels next year," Junker said in a note.
Recent data showed that industrial output, new orders and exports rose in September. Manufacturing activity expanded for the first time in 15 months. Unemployment dropped in October, though it is expected to rise in the coming months as the government slowly withdraws stimulus.
Further, the think tank said the economic sentiment index for the Eurozone fell to 51.8 in the month from 56.9 logged in the previous month. The index was forecast to rise to 58. The current situation index for the region climbed to minus 70.3 from minus 75.4 in October.
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