The State Street Investor Confidence Index rose 2.6 points to 99.5 in April, with March's index level revised upward to 96.9. The rise in the confidence of global institutional investors was driven by a 4.6 increase in the North American confidence index component to 98.3. The European component also added to strength, rising 1.3 point to 96.1, while the Asian component weakened the reading by declining 5.1 points to 104.7.
State Street noted that the improvement in North America and Europe is occurring despite geopolitical tensions and policy uncertainty in the U.S. and abroad, bolstered by a better glow growth outlook and expectations of higher inflation. However, the index is still shy of the 100 level mark, indicating that risk appetite is neutral and awaits details of the new U.S. tax plan and possible resurrection of the health care reform act.
Though the April report was calculated before the French election, the confidence increase of the European component even prior to the results of those elections, which evidently increased risk appetite, shows that fears of geopolitical risk and weak economic growth may have been overplayed in prior months by European institutional investors.