Institutional investors cautious

Institutional investors ended 2016 on a cautious note, according to the latest State Street Investor Confidence Index.

The index, released by State Street Global Exchange, revealed a decline of 3.4 points to 94.2, largely driven by weaker sentiment in both Asia and North America.

There was a 6.7 point decrease in the Asian index to 109.1 along with the six point decline in the North American index.

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This contrasted with the European index which rose 13.7 points from 86.4 to 100.

Commenting on the data, State Street's Kenneth Froot said the index had finished on a weak note as institutional investors continued to shy away from equities.

"Heading into 2017, investors are likely looking for greater clarity on their over-arching concerns regarding a Trump presidency and the hawkish tilt that accompanied the Fed's December rate hike," he said.

State Street's head of macro strategy, North America, Lee Ferridge said that while markets increasingly looked to be ‘priced for perfection' over the US economic outlook for 2017, it was interesting that institutional investors were more circumspect.

"Most noteworthy for me is the decline in the North American index even as US equities and the US dollar continues to rise," he said.

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