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Investor confidence drops with central bank, virus movements

— 1 minute read

Investor sentiment declined in September, according to State Street, as global equity markets fell, there was a global uptick in COVID cases and many felt the central banks took a lack of action.

State Street’s Global Investor Confidence Index decreased to 83.9 in September, down by 2.2 points from August’s reading of 86.1.

The drop in investor confidence was said to be primarily driven by decreases in European sentiment, with its regional confidence index down 12 points to 110.6 and Asia, where it was down by 5.6 points to 84.4.

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Meanwhile, the North American index slightly rose from 77.6 to 78.8, despite the volatility of US markets.

The index measures investor confidence or risk appetite by analysing the actual buying and selling patterns of institutional investors – the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral, as the level where investors are neither increasing nor decreasing their long-term allocations to risky assets. 

Marvin Loh, senior macro strategist at State Street Global Markets reported risk appetite had fallen as global equity markets dropped for the first time in six months.

“Investors continue to closely monitor the path of the virus, which has seen an uptick in new cases globally as well as in counties that had initially successfully lowered their infection rates,” Mr Loh said.

“Recent meetings of the central banks also figured prominently into this month’s reading, and the broad consensus was generally a disappointment in their lack of action.”

He added Europe had seen a decrease in double digits, as “as sentiment around tense Brexit negotiations and virus concerns offset constructive stimulus and COVID containment gains from prior months”.

 

Investor confidence drops with central bank, virus movements
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected]media.com.au.

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