State Street investor confidence index posts biggest jump in 18 months

North America is leading a global increase in investor confidence according to State Street Global Markets.

The firm’s proprietary measure of sentiment and risk appetite shows a rise of 12.9 points to 103.8 in the region in August, the largest increase across global regions. Europe (up 4.3 points to 103.7) and Asia (up 4.8 points to 102.2) saw far smaller increases and lower overall scores.

The Global Investor Confidence Index increased to 107.7, up 11.4 points from July’s revised reading of 96.3. The index is centered at 100 with movement above or below indicating institutional investors intentions to either increase or decrease their long-term allocations to risky assets.

“Investor confidence saw its biggest jump in 18 months, with the Global ICI now solidly in risk seeking territory, as risk appetite improved in every region this month,” commented Marvin Loh, senior global macro strategist at State Street Global Markets. “The improvement was led by North America, which recorded its strongest reading in a year on the heels of falling recessionary concerns. A pair of better-than-expected CPI prints have also supported the view that a soft landing was possible.”

INDIVIDUAL INVESTORS

The growing sentiment among the world’s largest investors is at odds with individual investors according to the latest survey from the American Association of Individual Investors.

For the week ended August 24, 2023, bullish sentiment remained below average for the second week in a row, while bearish sentiment was above average for the first time in 12 weeks.

Expectations that stock prices will fall over the next six months increased 5.8 percentage points to 35.9%. After 11 consecutive weeks of below-average readings, pessimism is above its historical average of 31.0%.