Global institutional investor appetite for equities continued to diminish in October, according to State Street data, whose Investor Confidence Index based on actual portfolio holdings of their institutional clients fell by a sharp 7.5 points to 96.9. Driving the decline in sentiment was a 8.7 point drop in the North American component to 96.8, along with a 6.7 point fall in the sub-index for Asia to 96.2. The European component saw a gentler 0.7 point decrease, but at 93.1 it remains the weakest globally.
The month's sentiment shift shows risk appetites diminishing to the lowest level since March of this year, with all three sub-indexes dropping below the neutral 100 point reading, indicating institutional investors are paring down their equity holdings. Investors may be factoring in the effects of monetary policy normalization and the potential for a more hawkish chair at the Federal Reserve, State street noted. Rising bond yields and a continued sense uncertainty regarding U.S. fiscal and trade policy have also apparently dampened risk appetites globally.