Headwinds in the US have hit the confidence of institutional investors around the world, according to State Street.
The State Street Investor Confidence Index (ICI) fell by 8.3 points in August, down to 89.7, which ICI developer Kenneth Froot attributed to conditions in US markets.
The ICI measures institutional investor trades to determine changes in risk appetite. A reading of 100 is 'neutral' and indicates that investors are neither increasing nor decreasing their long-term allocations to risky assets.
"An eventful [northern] summer along with a poorer than expected earnings season clearly took the wind out of US institutional investors' sails, pushing the US ICI deeper into the red," Mr Froot said.
The North American ICI saw the largest fall, down 10.3 points to 89.5, while European confidence for the month dropped 5.6 points to 86.8.
Confidence remained highest in Asia, at 106.1 points, with a 2 point decline less than half the fall recorded for July.
Mr Froot did note that US Federal Reserve chair Janet Yellen has given a speech since the reading was taken, and the full effect of this may not yet have been seen.
"As the August ICI reading was taken before Janet Yellen’s speech at Jackson Hole, it remains to be seen whether her growing conviction on the case for a rate hike will mark a further round of risk aversion,” he cautioned.
State Street Global Markets' head of macro strategy for Europe, the Middle East, and Africa, Timothy Graf, added that the recent improvement in risky asset valuations was not, for the most part, supported by institutional investors.
“The recent ‘melt-up’ in risky asset valuations does not appear to be endorsed by institutional investors," he said. “The exception to this would be the resilient sentiment we see in Asia, perhaps a reflection of receding fears of a hard landing in China."