Heightened expectations that the US Federal Reserve will increase interest rates dampened US sentiment, while China re-opening after its harsh lockdowns has cheered sentiment in Asia.

A global barometer of how confident investors are, based in their buying and selling activity, showed that their mood improved in February from the previous month. 

The Global Investor Confidence Index, issued by State Street, increased to 77.5, up 1.1 points from January’s revised reading of 76.4. The increase was led by a 5.8 point rise in the Asian ICI to 98.2, as well as a 4.1 point increase in the European ICI to 106.4. The North American ICI, meanwhile, fell 0.3 points to 72.8.

The index measures confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. 

“Investor confidence continued to consolidate, albeit with an overall defensive tilt as reflected in the global ICI firming to 77.5, but remaining well below 100,” Marvin Loh, senior macro strategist at State Street Global Markets, said. “Once again, North America had the weakest regional reading at 72.8, near the lowest levels seen since before the pandemic. The weak results follow a string of stronger-than-expected US data that has pushed the market to once again raise its expectations for Fed rate hikes.”

“The overall improvement in global risk was therefore led by better readings in the Asian and European ICI. Continued optimism regarding the pace and progress of China’s economic re-opening process contributed to regional optimism, while stable energy prices and a relatively mild winter in Europe buoyed investor sentiment near the one-year anniversary of the war,” Loh said.