US investor sentiment hits all-time low

As speculation continues to swirl around the likelihood of a recession in the United States, the latest State Street Investor Confidence Index has confirmed that North American investors continue to be the key to an ongoing decline.

The index revealed that Global Investor Confidence fell by 9.9 points to 65.9, with North American investors “once again the key drivers of this decline, as their confidence fell by over 10 points from 75.4 to reach an all-time low of 65.3”.

The index said this compared with European investor confidence, which improved from 83.9 points a month ago to 85 points, and Asian investor confidence, which fell marginally from 86.7 points to 85.8.

Commenting on the results, Harvard University professor and a founder of the index, Ken Froot, said the quantitative measure of global investor confidence had established a new low, cementing the evidence that investor risk appetite had been strongly impacted by the one-two punch of the August and November credit crises.

“In very recent days, we do see institutional investors following more of a holding pattern than a selling pattern, but the overwhelming conclusion from the data is that they are much more sceptical about fundamentals than they were in the first half of the year,” he said.

The co-founder of the index, State Street Associates director Paul O’Connell, said it was North American investors who had the bleakest outlook, while European and Asian institutional investors had maintained their risk appetite.

He said the North American pessimism is mirrored almost exactly in the behaviour of US Consumer Confidence over recent months, “The first time since 2003 that we have seen such congruence”.