Confidence sags in America but rises in Europe

Mixed-chartA quantitative report of institutional investors' buying habits suggests market sentiment in Europe far exceeded that in North America in October.

Sentiment among European institutional investors rose 10.2 points in October to 111.9, well above the neutral score of 100 on the State Street Investor Confidence Index (ICI). In contrast, sentiment among North American institutional investors dropped 17.8 points to 86.5.

“The fiscal showdown in the US clearly took the wind from the sails of institutional investors, pushing the Global ICI into negative territory for the first time since May of this year,” says Paul O’Connell of State Street Associates.

“The fact that the North American ICI posted a record fall in the same month that the European ICI posted its largest gain in almost three years tells you all you need to know about how policy perceptions are changing between the two areas,” adds Michael Metcalfe, head of cross strategy research at State Street Global Markets.

The State Street ICI is a quantitative measure of investor confidence or risk appetite constructed by analysing buying and selling habits of institutional investors. A score above 100 indicates that investors are increasing their long-term allocations to risky assets such as equities, a score below suggests investors are selling risk assets.

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