North American institutional investor sentiment jumps

Strong earnings growth expectations and optimism has turned around North American institutional investor confidence with a 10-point uptick to 112.1 in sentiment, according to State Street Global Exchange.

State Street Global Exchange’s Global Investor Confidence Index (ICI) increased to 108.9, up 7.9 points from June’s revised reading of 101. The European ICI decreased by 4.3 points to 94.2 and the Asian ICI declined by 1.3 points to 96.

State Street Associates managing director and head of investor behaviour research, Rajeev Bhargava, said continued improvements in global economic growth seemed to have ignited institutional investors’ risk appetite.

“Strong earnings growth expectations and optimism grounded in the improving economic outlook have taken precedence over the rising anticipation of reduced central bank balance sheets and a more hawkish tone,” he said.

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The index co-developer, Kenneth Froot, said the European ICI remained in risk-off territory.

“With fading political headwinds and a strong tone to the Eurozone corporate earnings data, the ECB's [European Central Bank’s] dovishness came as a surprise. As a result, European market participants continued to express caution,” he said.

“In addition, the buildup of corporate debt in China and concerns about the Trump Administration’s global trade policies may have led to the decline in the Asian ICI.”