Investors' Confidence Rose In April; North America Sentiment Remains Under Pressure

Editorial Staff 27 April 2023

Investors' Confidence Rose In April; North America Sentiment Remains Under Pressure

While the US banking system steadied in April after the traumas of March, North American investor sentiment remains under a cloud. Overall, however, global confidence rose in April, a regular report from State Street said.

State Street’s monthly barometer of how confident investors are about markets – based on their actual buying and selling activity – showed that their mood brightened in April. The data appeared to suggest that the collapse of Silicon Valley Bank in the US and Credit Suisse’s takeover by UBS in March had not significantly hurt sentiment. 

The Global Investor Confidence Index increased to 83.5, up 2.2 points from March’s revised reading of 81.3. Investor confidence was mixed across regions, with the North American ICI rising 1.6 points to 75.5, while the European ICI fell 6.4 points to 111.2 and the Asian ICI dropped 2.6 points to 89.3, State Street said.

The index measures investor confidence or risk appetite quantitatively by analyzing buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. 

“While the North America ICI posted a marginal 1.6 point increase to 75.5, it maintained the weakest regional reading as investors continue to navigate through banking stress and Fed tightening. In contrast, despite a drop in April, the 112.2 ICI reading for Europe remained at near two-year highs, with this region signaling the strongest level of risk taking. Marvin Loh, senior global macro strategist at State Street Global Markets, said. “The April numbers demonstrate a degree of comfort that US bank depositor stress will remain contained and not contribute to broader systemic risk. Nonetheless, sentiment in Asia slipped again, falling 2.6 to 89.3 on fading optimism of widespread gains from the reopening of the Chinese economy.”

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