Investor Confidence Continues to Climb, but Europe Lags
Posted by Colin Lambert. Last updated: June 2, 2023
Investor confidence has risen for the fifth consecutive month as measured by the State Street Investor Confidence Index (ICI), however the optimism was dampened a little by a second successive drop in European confidence.
The headline Global ICI rose to 89.8, up 6.3 points from April’s reading. This was driven by a 9.6 point rise in North American ICI to 85.1 as well as a 11.8 point rise in Asian ICI to 101.1. Meanwhile, as noted, European ICI fell for the second straight month, down 11.3 points to 99.8. A reading of 100 is neutral, signifying investors are neither increasing nor decreasing their long-term allocations to risky assets.
“Generally stronger than expected global growth since the start of the year resulted in a slightly less defensive tone amongst institutional investors as the global ICI reading rose to 89.8 in May,” observes Marvin Loh, senior global macro strategist at State Street Global Markets. “Further stability in the US banking sector contributed to a rebound in the North America ICI to 85.1, its highest reading in six months, although it remains the weakest regional reading.
“In contrast, the Europe ICI reversed recent gains falling back below the neutral 100 line to 99.8, its lowest reading in six months, as its largest economy fell into a recession and inflation is expected to result in more tightening from the ECB,” he continues. “Asia subsequently posted the strongest confidence figure, rising to 101.1 as we near the end of the global tightening cycle.”