Global sentiment dips after strong August gains

The State Street Global Investor Confidence Index (ICI) rose by 0.9 points to 108.7 this month, up from 107.8 in August. 

This compared to an increase of 11.4 points last month that was the biggest monthly gain seen by the index in 18 months. 

This month’s gains were driven by a 11-point jump in the Asian ICI to 112.6 points and a small rise of 0.8 points in the North American ICI to 104.7 points. North America had seen its largest rise of 12.9 points in the previous month.

However, the European ICI declined by 6.2 points to 97.5 this month, its lowest reading of the year so far that State Street attributed to deteriorating economic conditions in Europe. 

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All three regions had reported gains in the previous month.

Marvin Loh, senior global macro strategist at State Street Global Markets, said: “Investor confidence was stable in September, with the Global ICI posting a marginal gain on the heels of strong signals that the end of the global central bank tightening cycle was nearing a close.

“There were, nonetheless, mixed regional signals as economic divergence influenced overall investor appetite. North American investors remained risk-seeking as the Fed signalled that a soft landing remains its base case as it projected just one more rate hike this year. 

“Additional stimulus efforts from China seem to have brightened the regional readings as the Asia ICI jumped 11 points to its highest reading in almost three years.”

The Investor Confidence Index was developed at State Street Associates, State Street Global Markets research and advisory services business. 

It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. 

A reading of 100 would be neutral; it would be the level at which investors were neither increasing nor decreasing their long-term allocations to risky assets.