Global investor confidence up in May

The State Street Investor Confidence Index (ICI) went up 4.8 points in May to 97.1, despite recent market fluctuations.

The increase was led by a 5 point rise in the North American ICI to 99.1 as well as a 1.6 point rise in the Asian ICI to 93.1. However, the European index recorded a fall for the third straight month and dropped 8.7 points to 67.5.

Marvin Loh, senior macro strategist at State Street Global Markets, said investor confidence was partially boosted by the Fed’s decision to increase rates by 50 bps in May, with investors now anticipating a series of comparable increases in the coming meetings, and with the neutral rate in focus by year end.

However, the same cannot be said for the ECB, which has yet to start its normalization process, and the Europe ICI continued to fall to its lowest level in over 10 years, with inflation and the war weighing heavily on sentiment.

“Investor sentiment improved moderately in May, with the Global ICI rising to 97.1, recapturing much of the weakness reported in the prior month,” Loh said.

“The gains were led by improvement in the North America ICI, which increased to 99.1 from 95.1 in April, as peak hawkishness contributed to stabilizing sentiment.”

The Investor Confidence Index is developed at State Street Associates, State Street Global Markets’s research and advisory services business, in partnership with FDO Partners and measures investor confidence or risk appetite quantitatively, with a reading of 100 being neutral and indicating the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.