Global investor confidence slumps

Investor confidence slumped in October, pushed down by extremely negative sentiment in North America, according to State Street Global Exchange.

The State Street Investor Confidence Index fell 5.6 points to 95.7 points in October, despite a surge of confidence in Europe. Asian investors stayed their courses, recording only a modest increase in positive sentiment.

State Street Associate’s Paul O’Connell, who developed the index with Harvard University professor Kenneth Froot, attributed the pessimism in North America to the fiscal showdown in the United States.

“Notwithstanding the eleventh-hour resolution of the immediate crisis, investors are aware that the long-term fiscal policy of the US remains to be negotiated, and that the impact of such negotiations on growth and confidence is yet to be seen,” he said.

Michael Metcalfe, head of cross-strategy research at State Street Global Markets, said the stark contrast between North America’s record 17.8 point fall to 86.5 and Europe’s largest gain in almost three years, demonstrated how policy perceptions were changing between the two regions.

“With European confidence at its highest level since July 2007, investors hope that the worst of the eurozone crisis is past,” he said. “The US crisis of confidence, in contrast, may just be the beginning, unless policy uncertainty is reduced.”