State Street Global Investor Confidence Index (ICI) decreased to 114.3 in April, down 2.3 points from March’s revised reading of 116.6.
Confidence among North American investors decreased with the North American ICI falling 6.9 points to 122.1, down from March’s revised reading of 129.1.
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Meanwhile, the European ICI rose by 5.4 points to 109.7 while the Asia ICI rose 2.4 points to 91.5.
The Investor Confidence Index was developed by Kenneth Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business.
It measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors.
The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.
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By GlobalDataA reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
Froot commented: "Softer labor market growth in the US and rising equity valuations were likely key factors driving the decline in North American investor sentiment in April. With the Federal Reserve preparing markets for rate normalization and the strong dollar placing headwinds on overseas earnings of US multinationals, it will be interesting to see whether or not sentiment can remain at an elevated level in North America."
State Street Global Markets Global Macro Strategy senior vice president and head Michael Metcalfe added: "In Europe, despite continued fiscal troubles in Greece, sovereign quantitative easing from the European Central Bank helped provide a boost to investor confidence. Meanwhile in Asia, monetary easing by the People’s Bank of China helped boost the Asian ICI by 2.4 points."
