Brexit negotiations and Covid surge erode investor confidence

brexit_covid_investmentEuropean investor confidence fell to its lowest level this year due to Brexit concerns and an EU budget impasse, while risk appetite overall increased at a global level.

The latest State Street Investor Confidence Index saw European investors register a reading of 92, down 1.8 points on the revised total for October, marking a second consecutive month of declining sentiment. 

Any reading on the scale below 100 means investors are selling more risk assets than buying.

Marvin Loh, senior macro strategist at State Street Global Markets, said: “Risk appetite fell to its lowest levels of the year in Europe, as surging virus cases resulted in another round of lockdowns and restrictions.”

He added: “Ongoing Brexit negotiations and an EU budget impasse further sapped investor confidence, although most European bourses are set to report double-digit gains for the month.”

At a global level, however, investor confidence overall was on the rise, increasing to 90.7 – up over 10 points on October’s final total.

This, according to State Street, was primarily driven by a “jump” in the North American confidence index to 87.4 points. The Asian investor confidence index also increased, rising from 91.8 to 95.1.

Marvin Loh, senior macro strategist at State Street Global Markets, said: “The gains were led primarily by an improving outlook in North America, which recorded its highest readings of the year on the back of the conclusion of the U.S. election process and positive news regarding a Covid-19 vaccine.” 

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