European investor confidence dives

European investor confidence dropped 13.2 points in February thanks go banking and government credit spreads under pressure, according to State Street.

State Street's investor confidence index (ICI) found despite the Asian ICI increase of 9.2 points to 111.9 and the North American ICI rise from 108.9 to 109.3, the global ICI was still down 2.2 points to 106.5.

The index's co-developer Kenneth Froot, said swings in investor sentiment during the month was fuelled by high volatility in oil prices as well as dovish signs from central banks in Europe and Japan.

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"Moving forward, all eyes will be focused on the European Central Bank and the Federal Reserve's March meetings as the global growth outlook remains a key concern for investors," he said.

Also commenting, State Street Global Market's head of global macro strategy, Michael Metcalfe, said the narrative surrounding risk aversion seen so far in 2016 had focused on the weakness of global growth, China risks, and the knock-on impact of lower energy prices.

"However, the regional breakdown of our investor confidence index this month reveals a rather different set of concerns, with confidence rising in Asia but collapsing in Europe," Metcalfe said.

"The 13-point fall in confidence of European investors was the sharpest in 16 months. With banking and government credit spreads under pressure once again, this decline in European confidence highlights the pressing need for additional policy measures in the region."




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