The State Street Investor Confidence Index (ICI) decreased to 106.8 in August, down 2.1 points from July’s revised reading of 108.9.
The decline in sentiment was driven by a 4.9 point drop in the European ICI to 89.3 along with the 0.3 point decrease in the North American ICI to 111.8. By contrast, the Asian ICI rose by 3.3 points to 99.3.
The Investor Confidence Index was developed by Kenneth Froot (pictured), and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business.
“After a boost in risk appetite in July, global investors appear to be ‘on hold’ in August,” says Froot. “With that said, the cut off to this month’s ICI calculation (23 August) results in a figure that does not capture investors’ reaction to the Jackson Hole retreat, something that is clearly at the forefront of investors’ minds.”
“Everything appears to have gone right in the Eurozone this year,” says Michael Metcalfe, senior managing director and head of Global Macro Strategy, State Street Global Markets. “Growth and earnings have beaten expectations and political risk has not being realized. Nevertheless, the more cautious approach of European investors this month shows that the potential headwinds of a stronger Euro and eventual tapering of central bank asset purchases can no longer be ignored.”