German ZEW investor economic sentiment indicator likely dropped sharply in July on Brexit concerns

The German ZEW investor economic sentiment indicator is likely to have dropped sharply in July. According to a Societe Generale research note, the ZEW investor economic sentiment indicator is expected to have dropped to 5.5 in July from June’s 19.2 due to worries regarding the effect of Brexit vote. Even if stock markets, particularly European banks, initially witnessed huge drops, stock markets have rebounded in the last week.

However, additional data from the real economy is still required before the investor survey stabilizes, noted Societe Generale. The July business surveys in Germany, for instance Ifo and PMIs, are likely to show smaller drops than ZEW’s with possibly certain resilience in PMI services because of larger resilience in the domestic sector to concerns regarding Brexit, stated Societe Generale.