2018.06.0407:14:00UTC+00Eurozone Investor Confidence Plunges on Italian Political Upheaval

Eurozone investor confidence plummeted in June to its lowest level since October 2016, weighed down by the recent volatility observed in the Italian economy and worries of a trade war with the US.

A measure of investor confidence compiled by Sentix research institution declined to 9.3 in June from the 19.2 in the prior month and markedly below the 18.4 estimated by a Reuters poll. The measure of investor expectations for economic expansion in the eurozone also tumbled to its lowest point since August 2012.

Investors were rattled by turbulence in the euro area, stemming from the political uncertainty in Italy that caused major disruption in Italian markets in the previous week, Sentix found.

The index has continuously fallen since February, driven by investor concerns over a trade war with the U.S. as well as worsening U.S.-Chinese ties. Business confidence has fallen significantly since the beginning of the year, when the index stood at 32.9.

However, on Monday, Sentix said economic expectations in the region are tilting downward, adding that investors seemed to be anticipating a significant slowdown in growth in the euro bloc.

The rising tensions between the US and EU also affected investor confidence. In the previous week, President Trump announced new tariffs on imports of steel and aluminum from the EU, Canada and Mexico, triggering Brussels to threaten measures of its own in a heightening of transatlantic trade tensions.