State Street Global Markets has released the results of the State Street Investor Confidence Index (ICI) April 2022. The widely watched index measures investor confidence or risk appetite quantitatively by analyzing the buying and selling patterns of institutional investors.

A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

In April the Global ICI fell to 92.9, from a near-neutral figure of 99.5 in March. The decrease was led by an 8.0 point drop in North American ICI to 95.2 as well as a 6.7 point drop in European ICI to 76.2. While sentiment remains subdued in North America and particularly low in Europe, it showed an improvement in Asia, with the Asian ICI rising 2.4 points to 92.0.

Rajeev Bhargava, head of investor behavior research at State Street Associates commented: “The increasingly hawkish stance from the Fed in the face of surging inflation coupled with dampened global growth expectations likely drove aggregate risk sentiment lower. Interestingly, Asia was the only region that witnessed gains this month. However, with Covid-19 infection rates soaring in some regional markets and the resultant lockdowns impacting economic activity, it remains to be seen if this constructive path persists.”

Cuan Coulter, country head for the United Kingdom at State Street, added: “Investor sentiment in the UK remained unsettled in March. Inflationary pressures, escalating Russia-Ukraine tensions, and China’s Covid-19 resurgence have significantly dampened risk appetite.”