Investor confidence rises, still below neutral

Yasmine Raso

Senior Journalist, Financial Newswire

24 February 2023

State Street Global Markets’ latest Investor Confidence Index reading for February has seen it rise by 1.1 points to 77.5 from January’s revised reading of 76.4, despite remaining well below neutral territory.

The 0.3-point drop in North American investor confidence to 72.8 was made up by increases in other regions of the world, as Asian ICI jumped 5.8 points to 98.2 and European ICI also rose by 4.1 points to 106.4.

The index, based on actual trades of institutional investors, shows they are still decreasing their long-term allocations to risky assets amid volatile market conditions and widespread uncertainty as the Russian invasion of Ukraine continues into its second year and inflationary pressures continue to hassle central banks, consumers and investors alike.

“Investor confidence continued to consolidate, albeit with an overall defensive tilt as reflected in the global ICI firming to 77.5, but remaining well below 100,” Marvin Loh, Senior Macro Strategist at State Street Global Markets, said.

“Once again, North America had the weakest regional reading at 72.8, near the lowest levels seen since before the pandemic. The weak results follow a string of stronger than expected U.S. data that has pushed the market to once again raise its expectations for Fed rate hikes.

“The overall improvement in global risk was therefore led by better readings in the Asian and European ICI. Continued optimism regarding the pace and progress of China’s economic re-opening process contributed to regional optimism, while stable energy prices and a relatively mild winter in Europe buoyed investor sentiment near the 1-year anniversary of the war.”