Unlike polls and surveys, the State Street measure of confidence looks at what investors are actually doing in terms of buying and selling.
A barometer of how confident investors are about markets showed their mood brightened in July even though economic news remains challenging.
The Global Investor Confidence Index, produced by State Street, increased to 102.2, up 8.0 points from June’s revised reading of 94.2. The increase was led by an 8.1-point rise in the North American ICI to 104.5, and, to a lesser extent, a 4.4 rise in the Asian ICI to 93.2. The European ICI also rose marginally in July, up 0.7 points to 85.7.
“Global sentiment has been boosted by hopes that central bank rates will not need to rise as much as previously feared, as activity data shows signs of slowing. Whether the much-hoped for soft-landing can be achieved, however, remains a major uncertainty,” Lee Ferridge, head of multi-asset strategy, the Americas for State Street Global Markets, said.
The index captures the 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. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
“The North American series continues to lead the way rising by over 8 points, while the Asia index increased by 4.4 points. Sentiment towards European markets remains the laggard, however, rising just 0.7 points as, despite the recent decline in oil prices globally, ongoing concerns over the impact of the Ukraine conflict continues to render European investors cautious,” Ferridge said.