German investors bearish on US Iran withdrawal, spiking crude, trade war fears

LONDON (ICIS)–Investor confidence in Germany remained at its lowest ebb in several years for the second consecutive month following the US’ decision to break away from the Iran nuclear deal, spiking oil prices and trade war fears, research group ZEW said on Tuesday.

The economic analyst’s sentiment indicator stayed at minus-8.2 points in May, unchanged from April and representing a deeper slump than in the months following the UK’s Brexit vote in mid-2016.

The March economic confidence indicator level stood at 5.1 points and the long-term average of the metric is 23.4 points.

Investor assessment of the domestic economic outlook fell by 0.5 points to 87.4 despite resilience for Germany production and export markets, as geopolitical uncertainty continued to cast a shadow.

“The US decision to back out of the nuclear treaty with Iran and fears of a further escalation of the international trade conflict with the US, as well as a further rise of crude oil prices, have had an overall negative impact on economic expectations in Germany,”, ZEW president Achim Wambach said.

German market sentiment for the eurozone improved by 0.5 points month on month in May to 2.4 points, while rising oil prices increased inflation expectations by 12.5 points to 66.5.

“The effects of the relatively positive values for German exports and production in March 2018 have been overshadowed in the most recent survey by uncertainty motivated by recent political events,” Wambach added.