ZEW economic sentiment index rebounds to 10.5, beating expectations, as geopolitical risks in the Strait of Hormuz ease.
German investor sentiment improved in June, with the ZEW economic sentiment index climbing to 10.5 from -10.2 in May, surpassing forecasts of -6.0. The rebound reflects optimism over de-escalating US-Iran tensions, which may lead to the reopening of the Strait of Hormuz.
Current conditions deteriorated further to -81.0, the weakest since December, missing expectations of -78.0. The prior reading was -77.8. Despite the weak present assessment, the outlook shift suggests growing confidence in a near-term economic recovery.
A framework agreement between the US and Iran could allow the waterway to reopen within 30 days, though Iran will retain control over traffic flows. Markets may react positively to reduced geopolitical risks in a key oil transit route.