Insto investor sentiment falls

Global institutional investors have had their mood somewhat dampened in the September quarter, according to the State Street Investor Confidence Index.

Investor confidence fell by 5.6 points to 95.7 in September, which was mostly driven by a decline in sentiment among North American investors.

According to the index, North American investor confidence was pushed well into pessimistic territory at 86.5 points.

By contrast, confidence improved substantially among European institutional investors, which was reflected in sentiment increase of more than 10 points.

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"The fiscal showdown in the US clearly took the wind from the sails of institutional investors, pushing the Global ICI into negative territory for the first time since May of this year," said Paul O'Connell of State Street Associates.

"Notwithstanding the 11th hour resolution of the immediate crisis, investors are aware that the long-term fiscal policy of the US remains to be negotiated, and that the impact of such negotiations on growth and confidence is yet to be seen."

Head of cross strategy research at State Street Global Markets, Michael Metcalfe, said the fall in American sentiment at the same time as European investors showed optimism pointed to the change in policy perceptions between the two regions.

"With European confidence at its highest level since July 2007, investors hope that the worst of the Eurozone crisis is past. The US crisis of confidence, in contrast, may just be the beginning, unless policy uncertainty is reduced."